Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — DEFENCE

Hong Kong Military Service Corps (Passports)

Mr. Alexander: To ask the Secretary of State for Defence what representations he has received about the right to a British passport of members of the Hong Kong Military Service Corps.

The Minister of State for the Armed Forces (Mr. Archie Hamilton): My right hon. and learned Friend the Secretary of State for defence and I have received a number of representations about the allocation of passports to locally entered uniformed personnel serving in the military garrison in Hong Kong.

Mr. Alexander: Bearing in mind that we are dealing with members of a unit of the British Army, many of whom have served up to 22 years, during which time they have paid British taxes, and bearing in mind that we are talking about a maximum of 1,300 individuals, most of whom would not want to come here in any case, should we not make an exception in their case?

Mr. Hamilton: As my hon. Friend will know, there is a residual number of passports, of which we hope to secure a high proportion for many of these people, who I agree have given dedicated service to the Crown. I very much accept what my hon. Friend says and we should like to do everything that we can, within the allocation, to get as many of the passports as we can for those locally entered personnel.

Mr. Cox: Is the Minister aware that there is widespread support throughout the House for the point made by the hon. Member for Newark (Mr. Alexander)? Those personnel have loyally served the country and feel threatened by the changes in Hong Kong in 1997. They are in a very different position from other people such as prison officers or the police. I ask the Minister seriously to consider their request.

Mr. Hamilton: I very much accept what the hon. Gentleman says. They are indeed in a different position, and one of the things that make their position different from that of the police, prison officers, and so on is that their jobs will not continue after 1997. As I have already said, we are doing our best to secure as many passports as we can from the remaining tranche available. I take the point that many of those people do not want to come to this country, but they want the guarantee so that their

futures will be secure. We hope that their fears of persecution when the Chinese take over in Hong Kong are unfounded, and we have every reason to believe that they will be very fairly treated.

Yugoslavia

Mr. Spellar: To ask the Secretary of State for Defence what plans he has to change the regulations concerning the payment of local overseas allowance for British troops serving in the former Yugoslavia.

The Secretary of State for Defence (Mr. Malcolm Rifkind): Local overseas allowance is a tax-free addition to pay designed to compensate service personnel for the extra cost of serving in countries where day-to-day living expenses are higher than in the United Kingdom. This does not apply to British troops in former Yugoslavia who, in any event, do not pay local food and accommodation charges. Troops deployed there from bases in Germany nevertheless continue to receive a proportion of their local overseas allowance—70 per cent. for married personnel and 40 per cent. for single personnel—in recognition of continuing financial commitments in Germany.

Mr. Spellar: Does the Minister accept that, forgetting his lawyer's logic, the people of this country find it quite extraordinary that soldiers going into what is effectively a war zone in Yugoslavia are taking a pay cut and equally astonishing that those troops under fire are facing redundancy notices? When will he do something about that?

Mr. Rifkind: The hon. Gentleman really has not examined the matter properly. He should know perfectly well that British troops serving in Yugoslavia come from Germany and the United Kingdom. Those who come directly from the United Kingdom would not have been receiving an overseas allowance. Those who come from Germany receive an allowance to pay for the higher costs of living in Germany. It would be absurd to pay an allowance that is paid for one purpose in a territory where that purpose simply is not met; the hon. Gentleman should realise that before putting his rather foolish proposition.

Mr. Conway: I am grateful for my right hon. and learned Friend's reply because it is important that he remains flexible on that issue. It is undoubtedly very important to those serving in war zones, or however we may describe them, that their families are not at a financial disadvantage. Those who have been stationed in Germany, in particular, and whose wives and families remain there, still have serious financial commitments to meet. Is my right hon. and learned Friend aware that the flexibility of which he has assured us will therefore be greatly welcomed by the wives and families who remain in Germany?

Mr. Rifkind: Yes, it is a very flexible policy. If the Opposition had listened to my original answer they would realise that. Under current policy, personnel who have come from Germany and who continue to have commitments there will be paid 70 per cent. of the allowance if they are married and 40 per cent. if they are single. It would be absurd to pay them the full allowance,


which is partly to cover the cost of food and accommodation, when those serving in Yugoslavia receive food and accommodation completely free.

NATO

Mr. Jim Marshall: To ask the Secretary of State for Defence if he will make a statement on the role of NATO in a future European security policy.

Mr. Rifkind: NATO will remain the principal mechanism for the promotion of collective security and stability throughout the Atlantic area and the forum for agreement on policies bearing on the security and defence commitments of its members.

Mr. Marshall: I thank the Secretary of State for that answer, indefinite though it is. Does he agree that the success of NATO over 40 years was based on the imperative of defence and that, although the alliance had political structures, they were very much secondary and subordinate to that imperative? As a consequence, NATO was often much bigger and more effective than the sum of its parts. In the absence of that imperative, and with political differences and difficulties coming to the fore, might there not be a serious possibility that NATO could be fatally weakened and undermined?

Mr. Rifkind: The hon. Gentleman is right to draw attention to the fact that, with the ending of the cold war and the collapse of the Soviet Union, the circumstances in Europe for which NATO was originally designed have changed radically. We cannot assume, however, that all risk has disappeared. Clearly, Russia remains a nuclear super-power and while—at the moment—it has a friendly Government seeking to introduce democracy and western values, we cannot assume that to be a policy which will be achieved with great success in the foreseeable future. In addition, NATO must find ways of making available its valuable and expensive assets in order to contribute to other problems of security, as it is currently doing in, for example, former Yugoslavia.

Mr. Ian Bruce: Has my right hon. and learned Friend any plans for extending operational sea training facilities to other NATO navies? If so, will he produce some nice glossy brochures to sell the services of Portland rather than promoting the virtues of spending £600 million on new office blocks for Ministry of Defence civil servants?

Mr. Rifkind: I fully understand my hon. Friend's natural concern about that issue. As he will be aware, over the years we have already provided opportunities for sea training for other NATO countries. The United Kingdom is seen as a valued source of such training, and I am sure that it will continue to be so wherever sea training takes place.

Mr. Nicholas Brown: Will the Secretary of State confirm the importance of Britain's amphibious programme to future European security. In particular, will he repeat in the House what he said on "Newsnight" last week—that the Navy's new helicopter carrier is not to be cancelled to pay for the Army changes that he announced last week?

Mr. Rifkind: Amphibiosity continues to be a useful asset for the armed forces and, although it has not been used in recent years, it is, nevertheless, an important capability.
As for the landing platform helicopter, I repeat what I said in the House some time ago. We are continuing to evaluate the tenders that we have received. There is no question of cancelling the order to pay for last week's announcement about Army manpower. The continuing need for the LPH must be properly assessed on its merits, and that is how we shall proceed.

Mr. Ward: Does my right hon. and learned Friend agree that the changes in NATO have meant that there is an even bigger role for the amphibious forces? Important though the landing platform helicopter ship is, so are the replacements for the landing ships for the Royal Marines, who are probably the most efficient and cost-effective armed forces in the world. Can we ensure that they have the means with which to get to the places where they are required to work?

Mr. Rifkind: My hon. Friend is certainly entitled to point out that the present reliance on the landing platform docks to develop an amphibious capability continues to be important. We do not have an LPH at present, and we have not had one for several years. It is a question whether we should enhance the amphibious capability by proceeding with that order. My hon. Friend is right to draw that point to the attention of the House.

Dr. Reid: Here we are, five years and more after the end of the cold war, and today the Select Committee on Defence has illustrated once again what the Opposition have said for the past two years: the Government have no strategy on defence, no policy on security and no idea where they are going. How on earth can the Secretary of State pretend to fashion European defence policy when he has not a clue how to fashion British defence policy? Would he not do better to save himself another U-turn and a lot of time and trouble by telling the House today that he will instigate a full defence review? Alternatively, does he intend to go on as he has over the regiments and the dockyards, staggering from pillar to post and doing a disservice to himself as well as to the country and to the armed forces?

Mr. Rifkind: The hon. Gentleman could not even present his point with a straight face, which is not surprising as he represents a party which has done a complete somersault on nuclear disarmament and whose party conference—

Mr. Skinner: We are in a nuclear-free zone here.

Mr. Rifkind: I entirely concede that there are at least three Labour Members to whom my criticism does not apply. The Labour party conference continues to call for massive 25 per cent. reductions in the defence budget, so the hon. Member for Motherwell, North (Dr. Reid), who speaks from the Front Bench, should start to convert his own party supporters before he tries to instruct the Conservative party on a proper defence policy.

Defence Exports

Mr. Burns: To ask the Secretary of State for Defence if he will make a statement on the contribution to the economy of defence exports.

The Minister of State for Defence Procurement (Mr. Jonathan Aitken): Britain's defence exports for 1992 were £4.5 billion, representing 20 per cent. of the world market.
Those were record figures. In the month of January 1993, British companies won orders in the middle and far east with a value approaching that of our worldwide defence exports for the whole of 1992, so we now expect that 1993 will be another record-breaking year. We regard this as a satisfactory contribution to our economy.

Mr. Burns: Will my hon. Friend join me in paying tribute to our right hon. Friend the Prime Minister for his tremendous work in securing the important Tornado order and for safeguarding thousands of jobs in this country? Will my hon. Friend join me in congratulating HE, a company in my constituency of Chelmsford, on its important work in the building of Tornado?

Mr. Aitken: First, I am glad to confirm that HE, the admirable high-technology company in my hon. Friend's constituency, is likely to benefit from the large Tornado order. I make the point that all round the country approximately 150 British subcontracting firms will benefit from the order, in addition to British Aerospace, the main contractor. As my hon. Friend has said, all those companies have good reason to be extremely grateful to my right hon. Friend the Prime Minister for his superb negotiating skills which won the order.

Mr. Hutton: Can the Minister confirm that the Ministry of Defence has no current plans to sell any of the four Upholder class submarines which are due to enter service in the Navy in the near future? Will he take this opportunity to tell the House that those four submarines have an important role to play in the Navy's submarine service?

Mr. Aitken: I can certainly confirm that there are no current plans for the issues that the hon. Gentleman has raised. The question concerns defence exports generally. Whatever any one product may be, our disposals branch plays a useful role in selling unwanted defence equipment to overseas buyers.

Mr. Trotter: I congratulate my hon. Friend on the role that he played in obtaining the very valuable aircraft and tank export orders. May I draw his attention to the potential for naval exports and particularly, in this unstable world, the need of foreign navies for amphibious ships? If we proceed with the landing platform helicopter order in this country, which was recently described by the Commander-in-Chief Fleet as critical to the Navy's capabilities, it could lead to export orders which would help to maintain our defence and industrial base.

Mr. Aitken: My hon. Friend the Member for Tynemouth (Mr. Trotter) is a formidable champion of the interests of his constituency, where there is a great shipyard. He has been most helpful in pressing us to make efforts to achieve export orders for naval vessels, and there have been many successes in recent months. I certainly hope that, with my hon. Friend's help, we will continue to win orders in this important matter.

Dr. Lynne Jones: Instead of promoting the sale of weapons of mass destruction to undemocratic countries overseas, would not the Prime Minister have spent his time more successfully in taking a leaf out of the book of the Taiwanese Government and investing in our civil aerospace industry?

Mr. Aitken: The Prime Minister, on his recent trip, batted for Britain splendidly on civil and military matters and won orders for both. I am amazed by the hon. Lady's attitude, which conflicts with that of the many hon. Members who keep writing to me on behalf of their constituents asking us to fight for export orders. The hon. Lady reflects the confusion which was sown so excitably by the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) on 24 November, when he said that we should not be selling defence equipment to anyone other than non-military dictatorships. We are all waiting for clarification as to which regimes have the Labour party's seal of approval. Should we send back the orders in the meantime?

Germany

Mr. Pawsey: To ask the Secretary of State for Defence what is the total annual cost of maintaining British forces in Germany; and what will be the likely number stationed there in 1994.

Mr. Archie Hamilton: The defence budget provision for 1992–93 for the British Army of the Rhine and RAF Germany was £1,740 million. There will be around 36,000 troops stationed in Germany in 1994.

Mr. Pawsey: I thank my right hon. Friend for that typically full and complete reply. Does he agree, however, that there would be less strain on the Exchequer if British troops were stationed in the United Kingdom rather than in Germany, particularly as there is no longer any threat from the Warsaw pact? Would my right hon. Friend care to say why it might be thought that 23,000 troops in Germany is the right figure to maintain an American presence in NATO in Germany?

Mr. Hamilton: My hon. Friend says that there will be less strain on the Exchequer. In fact, there would be a greater strain on the Exchequer because if we brought those troops back we should have to spend a lot of money on barracks and so forth to relocate them in this country. It would help the balance of payments, but that would be very much outweighed by other costs.
I do not share my hon. Friend's view that there is now no threat from the east. We have to be very careful about Russia's capacity to regenerate its military power. I do not think that we should be complacent about that. Russia remains a major power in the world and we have to be very careful, because the political uncertainties in Russia are very great indeed.
As regards our contribution to NATO, it is extremely important that if we expect the Americans to continue to play a role in European defence through NATO we should make our contribution with forces overseas as well.

Mr. Madden: Will the Minister give a clear assurance that there is no prospect of the local overseas allowance paid to British forces in Germany being cut or removed altogether?

Mr. Hamilton: No, we continue to review the local overseas allowance which is paid to forces all around the world and therefore has to take into account the different costs of living in different parts of the world. We intend to continue that. The local overseas allowance is regularly updated as well.

Nuclear Warheads (CIS)

Mr. David Evans: To ask the Secretary of State for Defence what is his latest estimate of the number of fully operational nuclear warheads available to each country of the Commonwealth of Independent States.

Mr. Rifkind: We estimate that the former Soviet Union had some 27,000 or more nuclear warheads. All the tactical warheads are now in Russia. Of the strategic warheads, we believe that there are some 7,500 in Russia, 1,500 in Ukraine, 1,200 in Kazakhstan, and 80 in Belarus. I am sure that the House will join me in welcoming the ratification by Belarus on 4 February of the START 1 treaty and her commitment to accede to the non-proliferation treaty.

Mr. Evans: I thank my right hon. and learned Friend for that reply. Is he aware that Ukraine is selling nuclear weapons to whoever will buy them? Is it not time that we had a fifth Trident submarine? Will he assure me that he will not listen to the CND crackpots opposite? They do not care about jobs and they do not care about defence. All that they care about is the lack of defence of this country. Will he answer a direct question? Will they knock £6 billion off their defence budget? Let us have a simple answer: yes or no.

Mr. Rifkind: I think that I can happily endorse my hon. Friend's observations. The Labour party campaigned against the Trident programme and sought to denude Britain of its nuclear deterrent, and at its party conference it continues to call for massive reductions in our defence forces. That policy is matched only by the inconsistency of Labour Front-Bench Members simultaneously calling for more soldiers, more defence spending and more regiments. The Labour party's policy has only to be described to be seen as totally unworthy of any support from any reasonable source.

Mr. Cohen: The Secretary of State will know that the United Kingdom has offered to supply 250 containers and 20 transporters to the countries of the CIS to help them destroy their nuclear weapons, but is it not the case that the transporters have not yet begun to be delivered and will not be there until the end of 1994? Is it not also the case that the design of the transporters is chronically unreliable? If they break down on British motorways, are they not likely to break down on the pot-holed roads of the Soviet Union as well?

Mr. Rifkind: I think that I can reassure the hon. Gentleman. Until they are manufactured, it is difficult to deliver them, and they are in the process of being manufactured at present. I can assure the hon. Gentleman that the design will be of a sort that will be suitable for the purpose for which they are being sent.

Mr. Ian Taylor: Will my right hon. and learned Friend note that the President of the Ukraine is in the United Kingdom this week and therefore may well have heard the question of my hon. Friend for Welwyn Hatfield (Mr. Evans)? Will he also note that the problem of the continuing possession of nuclear weapons by the CIS is a matter of concern and underlines the importance of maintaining NATO and safeguards and encouraging the Americans to maintain their presence within NATO at the current level rather than switching to the rotation concept which has quite a lot of support among the Democrats?

Mr. Rifkind: I am sure that the President of the Ukraine does not need to be in the Chamber to hear the remarks of my hon. Friend the Member for Welwyn Hatfield (Mr. Evans). We do not have any evidence which shows that the Ukraine is selling nuclear weapons. Indeed, it does not have physical possession of the weapons on its territory: they continue to be in the control of the officers of the Commonwealth of Independent States.
Some weeks ago, we had a visit by the Ukrainian Minister of Defence, who gave an assurance that the Ukraine remains committed to removing all nuclear weapons from its territory. All tactical nuclear weapons have already been removed, and we look forward to its ratification of the START treaty in due course.

Dr. David Clark: Does the Secretary of State realise that almost the whole world, with the exception of the hon. Member for Welwyn Hatfield (Mr. Evans), approves of the START 1 and 2 treaties, which will bring about a reduction of nuclear warheads throughout the world, including the CIS? Can he give the House an assurance that when he deploys Trident Britain will not buck the trend and increase the number of nuclear warheads on its submarines from 192 to 512?

Mr. Rifkind: Unlike both the former Soviet Union and the United States, our determination of the size of our nuclear deterrent has never been based on principles of either parity or superiority. We have always sought to identify the minimum size of deterrent which is capable of ensuring the ultimate protection of these islands. We shall continue to apply that principle. It is the only sound principle with regard to the defence of the United Kingdom.

Mr. Barry Porter: While I cannot match the elegance or eloquence of my hon. Friend the Member for Welwyn Hatfield (Mr. Evans), he elicited from the Minister some frightening figures about the nuclear presence and power of those countries that comprised the Soviet Union at one stage. Would not it make sense for the Minister to consider that Britain's submarine capacity would be better served if a warship yard of proven ability such as Cammell Laird were given at least some breathing space to see whether it can provide the defence that the Minister obviously considers desirable?

Mr. Rifkind: We attach continuing importance to ensuring that our shipyards are able to meet the needs of the Royal Navy. Those needs change as the years go by, but it is crucial not only that our naval requirements should be met within the United Kingdom, but that the principle of competition should apply wherever possible to ensure that the cost to the taxpayer is kept to an absolute minimum.

WE177 Nuclear Bomb

Mr. Donohoe: To ask the Secretary of State for Defence if he will make a statement on the replacement of the WE177 free-fall nuclear bomb.

Mr. Rifkind: The WE177 is expected to remain in service well into the first decade of the next century. We are studying a range of possible options for its eventual replacement; I will make an announcement at the appropriate time.

Mr. Donohoe: Will the Secretary of State confirm that the WEI77 replacement will cost £3 billion? Will he accept the advice of the former hon. Member for Beckenham, who, on 22 November 1991, asked the Government to halt the replacement of that most expensive and unnecessary system?

Mr. Rifkind: I certainly cannot confirm the figure that the hon. Gentleman used, which I do not recognise. We are looking at a series of possible replacements for the WE177 which could either be an alternative free-fall bomb or another means of achieving a sub-strategic capability. It would be unwise to assume that there is no need for any intervening level of capability between conventional forces and the full power of our strategic Trident system. The whole basis of NATO defence policy, including our policy, has been to allow for the possibility of a graduated response in times of crisis. The hon. Gentleman should also take account of that.

Mr. Wilkinson: Does my right hon. and learned Friend agree that in an era of potential nuclear proliferation around the globe, it remains important for the United Kingdom, if it is to be a significant nuclear power in the future, to deploy a sub-strategic deterrent that is both credible and visible? In that connection, is not it sensible to have an air-launched system such as the one that the French and the Americans will be deploying?

Mr. Rifkind: It is certainly important to ensure that any system that we might choose is credible and reliable. An air-launched system is one option that has to be considered seriously. There are other possibilities and it would be wrong to foreclose any of the options until the work has been done. As I mentioned to the House a few moments ago, our current sub-strategic system will be available until well into the first decade of the next century. Therefore, we can study these matters with the care and detail that they obviously deserve.

Mr. Menzies Campbell: Will the Secretary of State take the opportunity today to exclude the tactical air-to-surface missile as one of those alternatives, because the need for it was conceived when NATO's nuclear doctrine was one of flexible response? Now that NATO's nuclear doctrine is that those weapons are weapons of last resort, what possible justification is there for a tactical air-to-surface missile, not least when a sub-strategic alternative could be achieved by the use of a single missile and single warhead on the Trident D5 system?

Mr. Rifkind: It would be wrong at this stage to exclude any of the options until the work has been done. Although the hon. and learned Gentleman is correct that the strategic situation has changed, as NATO continues to believe that flexible response is an important ingredient and that it is necessary to ensure the sub-strategic system in addition to strategic nuclear weapons, these matters must be considered with all the care that the issue clearly requires.

Sir Nicholas Fairbairn: Once my right hon. and learned Friend has had time, as I am sure he will, to read, mark, learn, inwardly digest and, I hope, act upon today's report from the Select Committee on Defence, will he note that the most spine-chilling piece of evidence was that nuclear material and weapons are leaching out of Russia into European, Arab and Muslim countries and that 163

countries have now obtained them? Will he state definitely to the House that we will ensure that our capabilities to deal with such weapons are sufficient to deter their use by countries that have unstable Governments and are within reach of Europe?

Mr. Rifkind: The proliferation of nuclear weapons must be a matter of serious concern. At a time when the Soviet Union—the world's second-largest nuclear superpower—is disintegrating, it is an important priority to ensure that the transition of the Soviet Union into its successor states is accompanied by the removal of all nuclear weapons from countries other than Russia and to assist Russia in the dismantling and destruction of surplus nuclear weapons. We must do so partly to prevent the disposal of weapons or their components to other countries.

Mr. Martlew: Yesterday the Chief Secretary to the Treasury said that we needed to review the welfare state because public expenditure was out of control. Today we have a damning indictment of the Government by the Select Committee on Defence, which says that we must spend more money on the Army. The answer must be for the Government to abandon their plans for a new nuclear bomb. We would save £3 billion if we scrapped the tactical air-to-surface missile. The Labour party would scrap TASM tomorrow. It is an embarrassment internationally and it has no military capability for the future. I predict that the Conservative Government will scrap TASM. Why does not the Secretary of State tell the House now that he will cancel it?

Mr. Rifkind: The hon. Gentleman says that a Labour Government would scrap TASM tomorrow. It is worth remembering that the same Labour Government would have scrapped Trident yesterday. That speaks for itself on the inadequacy on Labour thought on those crucial issues.

Mr. Dickens: Will my right hon. and learned Friend concede that we never know from where an attack may come? [Interruption.] Yes, even from the Opposition Benches. Does he agree that if we have a nuclear deterrent it must be updated? In the CIS nations inflation is running at 1,000 per cent. People cannot afford coffins to bury their dead. Hospitals cannot afford replacement needles. That group of nations has all the ingredients for another revolution. We must forget what is happening in the rest of the world and make sure that we can defend our nation.

Mr. Rifkind: My hon. Friend is right to remind us of those considerations. It is worth remembering that in 10 years' time, even if it has fully met all its obligations under the START and successor treaties, Russia will still have more than 3,000 strategic nuclear warheads and will still be the world's second-largest nuclear super-power.

Nuclear Test Veterans

Mr. Hall: To ask the Secretary of State for Defence what representations he has received in 1993 about compensation for nuclear test veterans.

Mr. Archie Hamilton: A small number of representations have been received so far this year.

Mr. Hall: Is the Minister aware that thousands of former British troops such as my constituent, Mr. Anderson, who was exposed to radioactive fall-out in the


clean-up of Christmas island, still await justice and compensation from our Government, whereas their counterparts in the United States and Canada have received just compensation from their Governments? When will the report that the Prime Minister mentioned on 14 January on compensation for those Army veterans be published? Will he confirm that the cases of constituents such as Mr. Anderson will be included in that report?

Mr. Hamilton: Most of the people who witnessed the explosions that took place as part of the atomic experiments were not exposed to any radiation whatever. A minority of those who were close to the explosions were exposed, but the radiation did not reach dangerous levels. The current problem, which has been revealed by a previous report of the National Radiological Protection Board, is that people who get older are more likely to contract cancer. It is reckoned that possibly a third of people may contract cancer at some time during their life. The latest NRPB report said that there was no link between those who had attended atomic tests and cancer. We are waiting for the next report to appear which I am told should be some time later this year.

Mr. Allason: With respect to my hon. Friend, is he aware that that reply might be misinterpreted as appalling complacency on the part of the Government? Does he further agree that the claimants for compensation who witnessed those tests in the Pacific are dying and that there should be no further delay in settling their very legitimate claims?

Mr. Hamilton: My hon. Friend describes it as complacency, but the fact is that we have ways of checking doses of radiation and if people have not received any radiation, there is nothing that I can do to alter it. The fact remains that there was no evidence of radiation spreading very widely from the areas of those explosions. As I have already explained to the House, people get cancer as they get older—and that happens widely across the whole population, whether they have witnessed nuclear tests or not.

Mr. Cryer: Does not the case of the nuclear test veterans demonstrate two things: first, the callousness of the Government's attitude to the victims and, secondly, the grave dangers of the deployment and use of nuclear weapons? Why do not the Government acknowledge that a contribution to peace would be for the Government to get rid of nuclear weapons and to honour their obligations, which they have consistently breached, under the United Nations nuclear non-proliferation treaty? Will the Minister confirm that 150 nations are pledged not to manufacture or deploy nuclear weapons? Why do not the Government support them?

Mr. Hamilton: The one thing on which I will congratulate the hon. Gentleman is consistency. During times when his party has changed its policy radically on the question of nuclear weapons, he always advocates that we should get rid of them. He knows, however, that the policy of this Government is and will continue to be to keep nuclear weapons. We believe that they do not put people's lives at risk in experimentation or anywhere else. They have saved many lives in terms of the deterrent provided.

Yugoslavia

Sir Michael Neubert: To ask the Secretary of State for Defence what number of British armed forces personnel are currently deployed onshore and offshore in support of United Nations actions in the former Yugoslavia.

Mr. Rifkind: The number of British armed forces personnel currently deployed, onshore and offshore, in direct support of United Nations operations in the former Yugoslavia is about 3,000. Additionally, there are some 320 personnel deployed for possible reinforcement or evacuation action on HMS Ark Royal and other British vessels in the area.

Sir Michael Neubert: Is not it transparent that the extra turn of the screw in reducing Army numbers, now reversed, was always Treasury-driven and not a military judgment; that the idea that substantial savings could be made while continuing to meet our likely commitments—the so-called peace dividend—was in part and in practice a delusion; and that the cancellation of the helicopter landing platform, the intended centrepiece of our amphibious capability, would be a contradiction of the rapid reaction role on which our new policy is to be based?

Mr. Rifkind: We have always said that it would be necessary to review requirements in the light of the changing international situation, but I emphasise to my hon. Friend that the main thrust behind "Options for Change" remains unchallenged because the United Kingdom, with the United States, France, Russia, and every other country of NATO and the former Warsaw pact, must make substantial reductions in the overall size of its armed forces. The cold war is over. As the cold war was the single most important reason for the level of defence expenditure that we have had over the past 40 years, it would be unrealistic to believe that it should continue regardless of the changes that have occurred. That is a factor which I believe will commend itself to the House.

Dr. David Clark: Is the Secretary of State satisfied that the Ark Royal is so short of facilities and so overcrowded that members of our armed forces have to sleep under their planes and by their equipment? Does not this show that we are overstretched in the Navy as well as in the Army and does not it also call into question the need for a helicopter landing ship? Will he tell the House this afternoon that he intends to proceed with that order?

Mr. Rifkind: As for HMS Ark Royal, the hon. Gentleman is being foolish. Ark Royal is in the Adriatic for a specific and limited purpose. It is perfectly able to provide proper, indeed excellent, accommodation for its normal crew, but on a temporary basis it is carrying additional personnel. The suggestion that that is evidence of overall underprovision is very silly.
As for the helicopter landing ship, as I told the hon. Gentleman, the tenders in respect of that order are under consideration and we shall make an announcement as soon as we can.

Job Transfers

Mr. Robert Banks: To ask the Secretary of Slate for Defence how many civilian and military jobs have been transferred from Yorkshire and the north of England to other locations, resulting from the review of defence establishments.

Mr. Archie Hamilton: To date, no posts have yet been transferred out of Yorkshire and the north of England as a result of "Britain's Defence for the 90s". A number of proposals have been made to date, however, that will enable my Department to make savings by rationalising posts and closing establishments.

Mr. Banks: I thank my right hon. Friend for that reply. I recognise the need for rationalisation, but will he place serious emphasis on the retention of jobs in Yorkshire and the north? Does he recognise the concern of my constituents, whose civilian jobs in the RAF Support Management Group are to be transferred to Cambridgeshire under his review? Will he reconsider that decision, in the light of the decision not to locate the Junior Leaders Regiment at the Army apprentices college—an excellent set of buildings which would be ideal to house the support group?

Mr. Hamilton: A substantial number of defence jobs is being maintained in Yorkshire, because Catterick remains a major garrison for our troops. As for my hon. Friend's proposal that the RAF support group should be moved to the site of the Army apprentices college, we are currently considering that and I shall contact him about it; but I remind him that the period of consultation on the proposal to close the college is still in operation.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Amess: To ask the Prime Minister if he will list his official engagements for Tuesday 9 February.

The Prime Minister (Mr. John Major): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today.

Mr. Amess: May I congratulate my right hon. Friend on launching a fundamental review of all Government spending, just as Conservative-controlled Basildon is currently doing? Does he agree that it is the responsibility of Government to ensure the best possible value for every pound of taxpayers' money that is spent?

The Prime Minister: As my hon. Friend so often reminds the House, where Basildon leads others tend to follow.
I welcome yesterday's statement by my right hon. Friend the Chief Secretary to the Treasury. The Government spend over £250 billion a year of taxpayers' money. I believe that it is necessary to look very closely at the way in which that money is spent and at where it is spent and to ensure that we obtain the best possible value for every pound that is spent. It is for that reason that we are conducting the review.

Mrs. Beckett: Does the Prime Minister recall the promise that he made during the election campaign only

10 months ago? He said that the Government had no plans and no need to extend the scope of value added tax. Does he stand by those words?

The Prime Minister: The hon. Lady knows that we are near to the Budget. She must wait.

Mrs. Beckett: The Prime Minister made just that promise to the British people when he needed their votes. Why will not he make it now?

The Prime Minister: The hon. Lady knows that we are close to the Budget. She must wait.

Mrs. Beckett: At the time of the election, the Prime Minister and all his colleagues promised no change in VAT, no other new taxes or charges and no cuts in the public spending plans that they had put before the British people. Is not it clear from the Prime Minister's refusal to answer a simple question that all his promises had a sell-by date of 9 April?

The Prime Minister: It is not remotely clear from that. What is clear is that we are close to the Budget and the hon. Lady will have to wait for the Budget to find out what it contains.

Mr. William Powell: Has my right hon. Friend had an opportunity to read the article by Robert Fisk in yesterday's edition of The Independent which describes systematic rape in Bosnia? Has not the time come for the establishment of a war crimes tribunal, so that those responsbile for the perpetration of such foul crimes can be brought to justice? Will my right hon. Friend do all that he can to ensure that, under the authority of the United Nations and the Conference on Security and Co-operation in Europe, such a tribunal is established as quickly as possible?

The Prime Minister: I have not seen the article to which my hon. Friend refers, hut, as he will know, we have been considering that matter in concert with the United Nations for some time.

Mr. Heppell: To ask the Prime Minister if he will list his official engagements for Tuesday 9 February.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Heppell: Is the Prime Minister aware that unemployment in my constituency, in the once-prosperous city of Nottingham, is now higher than in any Scottish or Welsh constituency, having risen by 44 per cent. between 1990 and 1992? With three out of 10 males now unemployed, when does the right hon. Gentleman expect unemployment to start to fall?

The Prime Minister: I do not doubt the hon. Gentleman's concern about unemployment, but I would respect it more if he did not support policies that would deliberately put people out of work—[Interruption.]—rather than back into work. He and his party have consistently argued for a national minimum wage and even the Fabian Society has recognised that
an inescapable part of a
national minimum wage
policy is increased unemployment.
Perhaps that is another policy which the Labour Front Bench could ditch.

Mr. Jacques Arnold: To ask the Prime Minister if he will list his official engagements for Tuesday 9 February.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Arnold: Will my right hon. Friend confirm that the British Government support the Owen-Vance peace plan and that they will continue to keep up their pressure on the warring parties to comply with that plan? In the meantime, will he confirm British support for the humanitarian aid now going to Bosnia?

The Prime Minister: Yes. I confirm both points. The Government's policy is fully to support the Owen-Vance peace plan, which was developed out of the conference that I chaired in London last August. We also wish to maintain the conditions in which our forces can support the United Nations humanitarian effort, without which many thousands of people alive today would otherwise have been dead. But we believe it to be necessary to increase the pressure on the parties to help seek a solution. The United Kingdom has put forward proposals for tightening the operation of sanctions across the Danube and for increasing the isolation of Serbia and the Bosnian Serbs if their aggression persists. I hope that that policy will be supported throughout the European Community and the United Nations.

Mr. Austin-Walker:: To ask the Prime Minister if he will list his official engagements for Tuesday 9 February.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Austin-Walker: Will the Prime Minister find time today to examine the effects of land contamination on job creation? In particular, will he examine the position of the Woolwich Arsenal site, which once employed 80,000 people in a single factory, but which now lies derelict in an area where male unemployment tops 62 per cent? Will he give a categorical assurance that, as the contamination was caused by the Ministry of Defence, the Government will meet the full cost of decontamination on that site and the neighbouring Thamesmead area?

The Prime Minister: The Secretary of State for Defence will have heard what the hon. Gentleman said, will examine the matter and will respond to him.

Mr. Harry Greenway: To ask the Prime Minister if he will list his official engagements for Tuesday 9 February.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Greenway: Does my right hon. Friend agree that the great teaching profession clearly welcomes higher standards through the national curriculum, but appears to be flinching from achieving them through standard assessment tests? Does he further agree that it is vital, above all in the interests of our nation and our children, that the tests go ahead without delay?

The Prime Minister: I believe that we need national tests to raise standards and it is our intention that they

shall go ahead. They are and remain a vital part of the national curriculum. Children need them, parents want them and I expect teachers to supervise them.

Mr. Llwyd: Will the Prime Minister confirm that he will meet the Minister of Agriculture, Fisheries and Food shortly to discuss his disgraceful betrayal of British farmers with the proposed cuts in hill livestock compensatory allowances—despite the promise, fewer than 18 months ago, that they were safe in his hands?

The Prime Minister: I meet my right hon. Friend many times a week, but, regardless of the cut in HLCAs to which the hon. Gentleman refers, hill farmers' incomes will be between £60 million and £70 million higher as a result of increased sheep premiums, the green pound devaluation and other market factors.

Mr. Nicholls: To ask the Prime Minister if he will list his official engagements for Tuesday 9 February.

The Prime Minister: I refer my hon. Friend to the answer I gave some moments ago.

Mr. Nicholls: Does my right hon. Friend agree that, while any convert to conservatism is always welcome, if that conversion is coupled with a continuing opposition to British Rail privatisation, grant-maintained schools, GP fund-holding practices and compulsory competitive tendering, it shows that the conversion is insubstantial and entirely unreal? Is not that now the position of the Leader of the Opposition?

The Prime Minister: I welcome all conversions to conservatism, especially death-bed conversions—but they must be genuine conversions, not conversions that use the language of conservatism but remain wedded to the instincts and policies of socialism. Until the right hon. and learned Gentleman formally drops his commitment to clause 4, his opposition to privatisation and his idiotic proposal for a windfall tax, no one will take his conversion seriously.

Mr. Terry Davis: Will the Prime Minister find time today to tell the President of the Board of Trade to get round the table with the Leyland DAF receiver, the management and the unions, in an attempt to save the van factory in Birmingham, which has a highly skilled and motivated work force of 2,000 people?

The Prime Minister: As the hon. Gentleman knows, that is a matter for the receivers.

Several Hon. Members: rose—

Madam Speaker: Order. Hon. Members must resume their seats.

Mr. Forman: When my right hon. Friend is considering new measures to help the unemployed, especially the long-term unemployed, will he give careful consideration to the idea of relaxing the social security rules that affect availability for work, so that it is possible for people to do more than 24 hours a week of voluntary work and more than 21 hours a week of educational study—to their benefit and that of the country?

The Prime Minister: We have looked and are looking at a range of measures that might encourage people back into


work. I cannot give my hon. Friend a particular undertaking on the point that he makes, but we are looking at a range of ways to assist.

Mr. Turner: To ask the Prime Minister if he will list his official engagements for Tuesday 9 February.

The Prime Minister: I refer the hon. Member to the answer I gave some moments ago.

Mr. Turner: The Prime Minister's record is not a good one. Since he came to office in 1990, more than 1 million people have joined the unemployed queues and more than 100,000 training places have been lost. Is this the vision of Opportunity Britain, or is it a sign of the growing army of jobless whose lives have been wasted by the Government?

The Prime Minister: What we have sought to do and are doing is to put in place the economic circumstances that will create genuine and lasting jobs. That is why we have cut inflation to its lowest level for six years, brought interest rates down to their lowest for 15 years and put in place the most comprehensive training programme ever seen in this country. That is the only way to secure long-term, permanent jobs—not the quick fixes so beloved of the hon. Gentleman and his colleagues.

Cleethorpes

Mr. Michael Brown: To ask the Prime Minister if he will make an official visit to Cleethorpes by train.

The Prime Minister: I am making plans for a series of visits to all parts of the country and hope to include my hon. Friend's constituency among them.

Mr. Brown: I am delighted to hear that reply. Does my right hon. Friend recall the days when he and I used to travel on the train to Cleethorpes, which used to stop at Huntingdon? Is he aware that if he makes his official visit to Cleethorpes by train, after May this year he will have to change at Newark and hang around on the platform catching flu for hours on end because British Rail is taking away the direct train service to Cleethorpes? Does he agree that it is vital that British Rail should continue that service at least until the Railways Bill is on the statute book, when we can take advantage of the franchising opportunities of privatisation?

The Prime Minister: I recall those journeys with my hon. Friend with great pleasure, but British Rail's monopoly service means that it decides what services to run in the light of its view of passenger demand. I stress to my hon. Friend that British Rail's reluctance to change its service now is no bar to subsequent changes. The privatisation proposals will break British Rail's monopoly and will bring in private sector operators and I believe that part of those franchises will provide a better, cheaper and more effective service for the commuter.

Constitutional Separation

Mr. Bill Walker: I beg to move,
That leave be given to bring in a Bill to create a constitutional framework within which separation from the United Kingdom may be achieved by England or Scotland or Wales or Northern Ireland.
I stand—[Interruption.]

Madam Speaker: Order. Would those hon. Members who are leaving the Chamber do so quickly and quietly please, so that we may proceed with the business before us? I am sure that the hon. Member for Tayside, North can now make himself heard.

Mr. Walker: I stand before you, Madam Speaker, wearing the dress of highland Scotland—[Interruption.]

Madam Speaker: Order. Would hon. Members please leave the Chamber and not hold conversations here? Would those hon. Members who are holding conversations at the Bar please do so quietly or remove themselves?

Mr. Walker: I stand before you, Madam Speaker, wearing the dress of highland Scotland. I do so because I have no wish to be described as a little Englander; nor do I wish there to be any confusion with the black shirts of west central Scotland.
As a committed monarchist and unionist, I am presenting a Bill which I believe will strengthen the Union of the United Kingdom. I also believe that, if enacted, it would flush out the minority separatists and demonstrate clearly how little support they enjoy throughout the United Kingdom.
For far too long, the separatists in Northern Ireland, Wales and Scotland have created massive political, constitutional and security problems. Successive United Kingdom Governments have tried to buy off support for the separatists by introducing devolution measures and power-sharing proposals. That has been done piecemeal at different times in Scotland, Wales and Northern Ireland. Sometimes it has been done in unison, but more often than not in isolation, and almost always with little consideration for the likely impact on other parts of the Kingdom.
Government proposals to introduce single-tier local authorities in Scotland, Wales and England are to be commended. Those all-purpose authority proposals should be implemented in Northern Ireland. If that were done, we would have similar local authority structures and powers throughout the United Kingdom. I believe that, if they were alive, Airey Neave and Ian Gow would endorse such proposals, because, like me, they would view this as a measure to bring constitutional government nearer to the people and thus reduce the political appeal of separatists.
Commendable as the local authority changes would be, they would not, in my view, completely address the problems created by the separatists, which is why my Bill, a constitutional Bill designed to address the gap in the constitution, is needed. Without such a Bill, a minority of dedicated separatists can and will continue to attract media attention—attention which is out of all proportion to the support enjoyed by the separatists within the electorate.
Although I am opposed to the establishment of an assembly in Edinburgh, that is not the issue covered by my

Bill. It is designed to create a constitutional framework within which any part of the United Kingdom, if the vast majority of the people so wish, could achieve separation. Consequently, I would not expect those who support the maintenance of the United Kingdom, but who wish to do so by way of establishing a federal structure or by way of devolved assemblies, to oppose my Bill.
If, however, support for an assembly, be it in Wales, Northern Ireland or Scotland, is seen as a first step towards separation, I will not be surprised, of course, to find those who hold this view opposing my Bill.
My Bill calls for the separatists in England, Wales, Northern Ireland or Scotland to present, in the first instance, a petition to Parliament demanding separation of that part of the United Kingdom from the rest of the United Kingdom. If 50 per cent. plus one of everyone entitled to vote in the general election were to sign such a petition, the Government of the day would organise a first ballot in that part of the United Kingdom, and only in that part of the United Kingdom. The ballot would have a single question on the paper. If it were Scotland, for instance, the question would be: "Do you wish Scotland to be separated from the rest of the United Kingdom—yes or no?" It would be a straight question.
If 50 per cent. plus one, or more, of those entitled to vote at a general election were to vote yes, there would follow a two-year period in which the true costs and the true benefits would be properly evaluated. In other words, the family assets and the family liabilities would be apportioned accordingly. That would include whether, in Scotland, Yarrow shipyard would continue to receive orders for frigates; what would happen to all the military bases in Scotland; indeed, what would happen to the Rosyth dockyard. All that would have to be decided, and of course the share of the national debt would be properly apportioned.
When that two-year exercise had been completed, there would be a requirement for a second ballot. The question again would be: "Do you wish Scotland to be separated from the rest of the United Kingdom—yes or no?" Again, if 50 per cent. plus one, or more, voted yes, separation would take place.
The Bill would also contain a clause which would place a 25–year moratorium on that part of the United Kingdom which had exercised the constitutional act but had failed to reach the 50 per cent. plus one in either the petition or either of the two ballots. The 25-year moratorium is designed to ensure that good local government measures and central Government administration could be carried out effectively, without having to be diverted constantly by media-oriented publicity and political activity of the separatists.
I believe that this unitary Parliament and the United Kingdom, with its unwritten constitution and single-Member constituencies, is far from perfect. Every day, I find things that require improvement. Even so, I still believe that we are most fortunate to live in the United Kingdom. Our constitution, although unwritten, gives us flexibility not enjoyed by countries with written constitutions. Citizens' rights are protected by the fact that Parliament is not bound by decisions made by previous Parliaments. If we get something wrong, as, we often do, we can rectify it the following year, which is one reason why I oppose ceding further powers to Europe. Also, a Member's right to ask questions and the right to have the


questions answered, when linked to parliamentary privilege, is the citizen's cost-free route to having wrongs righted.
Because I wish my children and my grandchildren to enjoy the benefits of the United Kingdom, the Westminster Parliament and the unwritten constitution, and because I do not wish them to lose that inheritance by default, constitutional change involving separation must and should require the support of the vast majority of the people, whether in England, in Scotland, in Wales or in Northern Ireland. If 37 Members elected on a ticket to come to this House were to sit in Edinburgh and say that it was a Scottish Parliament, we would have a constitutional headache of immense proportions, and we would have separation by default. Therefore, constitutional change should have the support of a vast majority. That is why we need the Bill.

Mr. John McAllion: I rise as one of the red check shirts from the east coast of Scotland. I cannot speak for the black shirts; Conservative Members have more familiarity with black shirts than I do.
There are any number of reasons why we should oppose the Bill promoted by the hon. Member for Tayside, North (Mr. Walker). Indeed, there are many in Scotland who would ague that the fact that the Bill has been presented by the hon. Gentleman is in itself sufficient reason for opposition. After all, he was one of the foremost proponents and defenders of the poll tax in Scotland, and he remains to this day a keen supporter of water privatisation in Scotland. He might even be described as a Thatcher loyalist, someone who would revisit the Baroness on Scotland and on the rest of the United Kingdom. So I would argue that he could not be trusted with the constitutional arrangements for a bowling club, never mind those for one of the most ancient, historic nations in the continent of Europe. I refer to Scotland—which, as you know, Madam Speaker, preceded the birth of the United Kingdom by many centuries.
There are reasons other than the obvious shortcomings of the hon. Member for Tayside, North as to why the Bill should be opposed. First and most important, it is based on the idea that the House can tell Scotland what it must do to achieve independence. I do not want to get into an argument about the differences between the policy of the SNP on independence in Europe and the Labour party's policy of home rule within the United Kingdom; it is sufficient to say that both argue for a Parliament within the union. One would be within the European union and the other would be within the union of the United Kingdom.
The Bill assumes that sovereignty over Scotland—

Mr. Jon Owen Jones: and Wales.

Mr. McAllion: — and Wales—rests with a majority in the House. Nothing could be further from the truth. Sovereignty over Scotland rests with the Scottish people and only with the Scottish people. Sovereignty over Wales rests with the Welsh people and only with the Welsh people, as sovereignty over England rests only with English people. (HON. MEMBERS: "Hear, hear."] That is not just my view; the "Hear, hears" from my hon. Friends and other Opposition Members show that it is the general view of the Opposition parties.
That has always been the view of the Scottish National party. Since the claim of rights for Scotland has been supported by the Labour party and the Liberal Democratic party, it is their view as well. Therefore, it can be argued that it is the view of 75 per cent. of Scottish voters in the most recent general election.
There exists in Scotland a massive majority opposed totally to the thinking behind the Bill proposed today. Even more, the Bill reeks of double standards and humbug. The hon. Member for Tayside, North said that, before Scotland and Wales could vote to separate themselves from the United Kingdom, a petition signed by 50 per cent. of those entitled to vote, plus one, would have to be presented to the House. That means 50 per cent. of those on the electoral register plus one.
Such support has never been achieved by any party this century. It is clearly meant to be a blocking mechanism to prevent any of the countries from moving away from the union. Indeed, the hon. Member belongs to a political party that readily accepted in last April's general election in Scotland that, had 37 Scottish national party Members of Parliament been returned, that would have been a mandate for separation from the United Kingdom.
As you know, Madam Speaker, 37 Members can be elected from Scotland on less than 40 per cent. of the vote —or less than one third of those whose names are on the electoral register. It seems neither sensible nor reasonable, therefore, to argue that less than a third of those entitled to vote in an election represent a mandate for separation, yet in a wholly unreal situation such as a ten-minute Bill that is going nowhere in the House to argue that, for separation, there must be a majority of 50 per cent. of those entitled to vote. The Bill adds nothing sensible or reasonable to the future government of Scotland and should be ignored for that reason.
But perhaps worst of all, Scotland is currently governed under constitutional arrangements that have the support of only 25 per cent. of those who voted at the last general election. Indeed, they have the support of only 19 per cent. of those whose names are on the electoral register in Scotland. I refer to those who voted for the Tories and for the constitutional status quo.
By the standards of his own Bill, the hon. Member for Tayside, North is arguing that the Tory Government do not have a mandate to run Scotland. Indeed, according to the mandate requirements of his Bill, the only parties that have a mandate to run Scotland are those that support a directly elected Scottish Parliament. Those parties received three out of every four votes at the last election and the support of more than half of those on the electoral register.
If the hon. Member for Tayside, North were being true to the proposals in the Bill, he would have joined Scotland United and would be taking part in a vigil outside the Scottish Parliament building in Edinburgh. He would have stood side by side with Opposition Members on top of an open-deck bus proclaiming Scotland's right to self-determination since the last election in April.
But this is not a serious Bill; it is a parliamentary stunt that does nothing for democracy and nothing for the right of the Scottish people to self-determination. Nor does it do anything for the very real problems that face far too many Scots in the hard lives that they must endure under a Government they did not elect.
A new generation has grown up in Scotland during a period in which Scotland has been rendered powerless by the Westminster system of government. That generation,


and other generations of older Scots, are no longer prepared to accept or tolerate that situation. They recognise that all the rights that they regard as important —the right to a decent education, to proper training, to a job, to a living wage, to decent housing and to decent health care—do not grow on trees but spring from the system of government under which people live.
They are no longer prepared to tolerate a system that gives no voice to what they have to say in the government of their own country. They are no longer prepared to tolerate being told what they can or cannot do by those whom they did not elect. They are no longer prepared to tolerate parliamentary stunts such as that which the hon. Member for Tayside, North has tried to pull off this afternoon. We, the elected representatives of that majority in Scotland, are here to ensure that this Parliament will pay attention to the just demands of the Scottish people for self-determination.

Madam Speaker: The Question is that the hon. Member have leave to bring in his Bill. As many as—

Sir Nicholas Fairbairn: On a point of order, Madam Speaker. My hon. Friend the Member for Tayside, North (Mr. Walker) suggested that he was in highland dress: he is in nothing of the kind. He misled the House, and I have reason to believe that he is wearing little red pants under his kilt.[Laughter.]

Madam Speaker: Order. I have had enough colourful descriptions for one day. I shall now put the Question.

Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business) :—

The House divided: Ayes 28, Noes 180.

Division No. 144]
[3.48 pm


AYES


Alexander, Richard
Porter, Barry (Wirral S)


Banks, Matthew (Southport)
Porter, David (Waveney)


Boyson, Rt Hon Sir Rhodes
Ross, William (E Londonderry)


Cran, James
Smyth, Rev Martin (Belfast S)


Deva, Nirj Joseph
Spink, Dr Robert


Dicks, Terry
Stern, Michael


Duncan, Alan
Taylor, Rt Hon John D. (Strgfd)


Fry, Peter
Townend, John (Bridlington)


Gorman, Mrs Teresa
Trimble, David


Greenway, Harry (Ealing N)
Walker, Bill (N Tayside)


Hawksley, Warren
Whittingdale, John


Hunter, Andrew
Winterton, Nicholas (Macc'f'ld)


Kilfedder, Sir James



Lawrence, Sir Ivan
Tellers for the Ayes:


Marland, Paul
Sir George Gardiner and


Molyneaux, Rt Hon James
Mr. Christopher Gill.




NOES


Abbott, Ms Diane
Blunkett, David


Adams, Mrs Irene
Boyce, Jimmy


Ainger, Nick
Bruce, Malcolm (Gordon)


Ainsworth, Robert (Cov'try NE)
Burden, Richard


Allason, Rupert (Torbay)
Campbell, Mrs Anne (C'bridge)


Allen, Graham
Campbell, Ronnie (Blyth V)


Alton, David
Cann, Jamie


Anderson, Ms Janet (Ros'dale)
Chisholm, Malcolm


Armstrong, Hilary
Clapham, Michael


Austin-Walker, John
Clark, Dr David (South Shields)


Battle, John
Clarke, Tom (Monklands W)


Beith, Rt Hon A. J.
Clelland, David


Bennett, Andrew F.
Coffey, Ann


Berry, Dr. Roger
Cook, Frank (Stockton N)


Betts, Clive
Corbyn, Jeremy





Corston, Ms Jean
Macdonald, Calum


Cox, Tom
McFall, John


Cryer, Bob
Mackinlay, Andrew


Cummings, John
McLeish, Henry


Cunliffe, Lawrence
McMaster, Gordon


Cunningham, Jim (Covy SE)
McNamara, Kevin


Dafis, Cynog
Madden, Max


Dalyell, Tam
Mandelson, Peter


Darling, Alistair
Marek, Dr John


Davies, Ron (Caerphilly)
Marshall, Jim (Leicester, S)


Davis, Terry (B'ham, H'dge H'l)
Martlew, Eric


Denham, John
Meale, Alan


Dixon, Don
Michael, Alun


Donohoe, Brian H.
Michie, Bill (Sheffield Heeley)


Dover, Den
Michie, Mrs Ray (Argyll Bute)


Dowd, Jim
Mitchell, Austin (Gt Grimsby)


Dunnachie, Jimmy
Moonie, Dr Lewis


Eagle, Ms Angela
Morgan, Rhodri


Eastham, Ken
Morley, Elliot


Enright, Derek
Morris, Rt Hon A. (Wy'nshawe)


Evans, John (St Helens N)
Mowlam, Marjorie


Ewing, Mrs Margaret
Mudie, George


Faulds, Andrew
Mullin, Chris


Flynn, Paul
Oakes, Rt Hon Gordon


Foster, Derek (B'p Auckland)
O'Brien, Michael (N W'kshire)


Foster, Don (Bath)
Olner, William


Foulkes, George
O'Neill, Martin


Galloway, George
Pickthall, Colin


Godman, Dr Norman A.
Pike, Peter L.


Golding, Mrs Llin
Powell, Ray (Ogmore)


Gordon, Mildred
Prentice, Ms Bridget (Lew'm E)


Griffiths, Nigel (Edinburgh S)
Prentice, Gordon (Pendle)


Griffiths, Win (Bridgend)
Primarolo, Dawn


Grocott, Bruce
Radice, Giles


Gunnell, John
Raynsford, Nick


Hain, Peter
Redmond, Martin


Hall, Mike
Robertson, George (Hamilton)


Hanson, David
Robertson, Raymond (Ab'd'n S)


Hardy, Peter
Roche, Mrs. Barbara


Harman, Ms Harriet
Rooney, Terry


Henderson, Doug
Ross, Ernie (Dundee W)


Heppell, John
Salmond, Alex


Home Robertson, John
Sedgemore, Brian


Hood, Jimmy
Sheerman, Barry


Hoon, Geoffrey
Sheldon, Rt Hon Robert


Howarth, George (Knowsley N)
Shepherd, Colin (Hereford)


Hoyle, Doug
Simpson, Alan


Hughes, Kevin (Doncaster North)
Skinner, Dennis



Smith, C. (Isl'ton S & F'sbury)


Hughes, Roy (Newport E)
Smith, Llew (Blaenau Gwent)


Hughes, Simon (Southwark)
Soley, Clive


Hutton, John
Spearing, Nigel


Illsley, Eric
Spellar, John


Ingram, Adam
Squire, Rachel (Dunfermline W)


Jackson, Glenda (H'stead)
Steel, Rt Hon Sir David


Jackson, Helen (Shef'ld, H)
Steinberg, Gerry


Johnston, Sir Russell
Stott, Roger


Jones, Barry (Alyn and D'side)
Straw, Jack


Jones, Jon Owen (Cardiff C)
Taylor, Mrs Ann (Dewsbury)


Jones, Lynne (B'ham S O)
Thompson, Jack (Wansbeck)


Jones, Martyn (Clwyd, SW)
Turner, Dennis


Jones, Nigel (Cheltenham)
Tyler, Paul


Jowell, Tessa
Vaz, Keith


Keen, Alan
Watson, Mike


Kennedy, Charles (Ross,C&S)
Wicks, Malcolm


Khabra, Piara S.
Wigley, Dafydd


Kirkwood, Archy
Williams, Alan W (Carmarthen)


Leighton, Ron
Wilson, Brian


Lestor, Joan (Eccles)
Winnick, David


Lewis, Terry
Wise, Audrey


Litherland, Robert
Worthington, Tony


Lloyd, Tony (Stretford)
Wray, Jimmy


Llwyd, Elfyn
Wright, Dr Tony


Loyden, Eddie



Lynne, Ms Liz
Tellers for the Noes:


McAllion, John
Mr. Bill Etherington and


McAvoy, Thomas
Mr. Ian Davidson.


McCartney,Ian

Question accordingly negatived.

Points of Order

Mr. Barry Porter: On a point of order, Madam Speaker. I am not given to making specious points of order, but, during exchanges in Prime Minister's Question Time, I distinctly heard, and I have no doubt that you did also, the word "pillock" being used by the hon. Member for Worsley (Mr. Lewis) from a sedentary position—not once, not twice, not thrice but four times. I was not sure whether it was a generic term of abuse of the Government Front Bench or a specific term for the Prime Minister.
As I was brought up in a fairly genteel society, I am not sure what the word means, but even if it means what I think it means, could I have your ruling, Madam Speaker, whether "pillock" or "pillocks" is an appropriate parliamentary term? I raise the matter only because there are times when we might resort to the language of ladies and gentlemen rather than to the language of hooligans.

Madam Speaker: I certainly agree with the hon. Gentleman's last remark. From time to time, our language deteriorates. However, the hon. Gentleman is not quite correct in one aspect. I certainly heard no such word used; otherwise I would have called it to the attention of the hon. Member who used it. I do not know what the word means—I do not wish to know what the word means—but I find it rather ugly, and I prefer it not to be used.

Mr. Dennis Skinner: Further to that point of order, Madam Speaker. I was sitting much closer to my hon. Friend the Member for Worsley (Mr. Lewis) than the hon. Member for Wirral, South (Mr. Porter) was. 'When the Prime Minister was talking about a matter for the receivers, my hon. Friend and others, including myself, shouted "hypocrisy" several times at the Prime Minister, and we meant it. I believe that to be in order, but I did not hear the other word. [Interruption.]

Madam Speaker: Order. This is not confession time. We must move on now.

Mr. Terry Lewis: Further to that point of order, Madam Speaker.

Madam Speaker: The hon. Member for Worsley (Mr. Lewis) has just dashed into the Chamber, in an attempt, no doubt, to defend himself. Of course I must hear his point oforder.

Mr. Lewis: Thank you, Madam Speaker. I understand that certain words were attributed to me during Prime Minister's Question Time. I am not absolutely certain what words were used, but I put it to you, Madam Speaker, to the House and to the country that, when the Prime Minister treats the workers of Leyland DAF in such an offhand, arrogant way, anybody of reasonable mind would accept any words that werespoken.

Madam Speaker: Whatever the exchanges in the House, English is a very rich language. I hope that we select it very carefully, however upset and excited we might become in ourexchanges.

Orders of the Day — Housing and Urban Development Bill

As amended (in the Standing Committee), considered.

[MADAM SPEAKER in the Chair.]

Ordered,

That the Housing and Urban Development Bill, as amended, be considered in the following order, namely, New Clauses relating to Part I, amendments relating to Clauses 1 to 8, Schedules 1 and 2, Clauses 9 to 11, Schedule 3, Clauses 12 to 22, Schedule 4, Clauses 23 to 28, Schedule 5, Clauses 29 to 30, Schedule 6, Clause 31, Schedule 7, Clause 32, Schedule 8, Clause 33, Schedule 9, Clauses 34 to 36, Schedule 10, Clauses 37 to 38, Schedule II, Clauses 39 to 52, Schedule 12, Clauses 53 to 57, Schedule 13, Clauses 58 to 61, Schedule 14, Clauses 62 to 91, New Schedules relating to Part I, New Clauses relating to Part II, amendments relating to Clauses 92 to 104, Schedule 15, Clauses 105 to 107, Clauses 118 to 119, Clauses 125 to 129, Clause 108, Clause 130, Clause 109, Clause 131, Clauses 110 to 114, Clauses 132 to 134, Clauses 115 to 117, Clauses 120 to 124, Clauses 135 to 138, New Schedules relating to Part II, New Clauses relating to Part III, amendments relating to Clauses 140 to 141, Clause 139, Schedules 16 and 17, Clause 142, Schedule 18, Clauses 143 to 150, Schedule 19, Clauses 151 to 166, New Schedules relating to Part III, New Clauses relating to Part IV, amendments relating to Clauses 167 and 168, Schedules 20 and 21, Clause 169, New Schedules relating to Part IV, remaining New Clauses, remaining New Schedules.—[Sir George Young.]

New Clause 13

TENANCIES TERMINABLE AFTER DEATH OR MARRIAGE.

"Right to enfranchisement only in case of certain tenancies terminable after death or marriage.
`.—(1) The following section shall be inserted in the Leasehold Reform Act 1967 after the section IA inserted by section 59 above—

1B. Where a tenancy granted so as to become terminable by notice after a death or marriage—

(a) is (apart from this section) a long tenancy in accordance with section 3(1) below, but
(b) was granted before 18th April 1980 or in pursuance of a contract entered into before that date,

then (notwithstanding section 3(1)) the tenancy shall be a long tenancy for the purposes of this Part of this Act only so far as this Part has effect for conferring on any person a right to acquire the freehold of a house and premises."

(2) In section 3(1) of that Act (meaning of "long tenancy")—

(a) after "and includes" there shall be inserted "both a tenancy taking effect under section 149(6) of the Law of Property Act 1925 (leases terminable after a death or marriage) and"; and
(b) in the proviso (which prevents certain categories of tenancies terminable after death or marriage being long tenancies), for the words from "if either" onwards there shall be substituted "if—


(a) the notice is capable of being given at any time after the death or marriage of the tenant;
(b) the length of the notice is not more than three months; and
(c) the terms of the tenancy preclude both—


(i) its assignment otherwise than by virtue of section 92 of the Housing Act 1985 (assignments by way of exchange), and
(ii) the sub-letting of the whole of the premises comprised in it.".'.

Brought up, and read the First time.

The Minister of Housing and Planning (Sir George Young): I beg to move, That the clause be now read a Second time.

Madam Speaker: I understand that it will be convenient to discuss at the same time Government amendments Nos. 55, 76, 56, 78 and 79.
I draw the attention of the House to Government amendment No. 56, which refers to line 22. There is a misprint; it should read "line 12". I make that point so that it need not be mentioned again.

Sir George Young: I repeat an interest which I have declared on previous occasions. I am the owner of a 999-year lease on a flat in my constituency, although it is not a lease that terminates on the death of the Prince of Wales, which is the subject of new clause 13.
When we debated the matter in Standing Committee, I undertook to reflect on the case for retrospectively bringing within enfranchisement lessees who are presently excluded by the so-called Prince of Wales clause. It is a blatant avoidance device used by some landlords, and its use was blocked prospectively by the Housing Act 1980. Leaseholders persuaded us that, in practice, many of their number would have been unaware of the effect of that clause in their leases, and no landlord groups have made any representations in favour of the clause. In the light of that, we have decided that it would be contrary to the aims of our reforms to leave that small group of leaseholders high and dry.
This new clause, with its associated group of amendments, will amend the Leasehold Reform Act 1967 by adding a new section and modifying the existing section 3. It will enable a leaseholder who was granted a long lease on a house before 18 April 1980, which would qualify under the 1967 Act except that it contains a clause which renders it terminable by notice after the death of, for example, the last survivor of any issue of King George V alive at the time of the grant—hence the name of the Prince of Wales clause—to acquire the freehold interest.
The valuation basis will be the higher of the two in the 1967 Act —the so-called special valuation base. That is consistent with our policy expressed in the Bill, that leaseholders who are given new rights should pay the market price for the interest that they can now purchase.
Nothing in the new clause will prevent landlords from continuing to grant bona fide life tenancies to, for example, former employees.Such leases will continue to be unenfranchiseable. Houses which were previously excluded from enfranchisement because of a Prince of Wales clause will be eligible for inclusion in an area subject to an estate management scheme set up under chapter IV of the Bill.
I hope that the House will recognise that this new clause signifies the Government's desire to he fair with the leasehold reform package. The new clause reforms an anomaly which is no longer defensible, and I commend it to the House.

Mr. John Battle: We welcome the new clauses which the Government have tabled on the Prince of Wales clause. They signify some give, after efforts were made in Committee. While the Government's intentions to extend enfranchisement to leaseholders are reflected in the

clauses, what we have before us in the amendments and the new clauses do not satisfy all the promises which the Minister gave in Committee.
While we welcome the Minister's shifting of the direction of enhancing and extending leasehold, we would—as we said in Committee—push further: we want commonhold. At least the Government have given us an assurance that we shall get commonhold. We look forward to the Government introducing a commonhold Bill so that we can proceed with that.
Some small measure is provided in the Government's clauses which we are immediately discussing. I hope that the three quarters of a million leaseholders who think that they will be enfranchised under the legislation actually will be, because there is still a danger, despite the new clauses, that the Bill is hedged with exemptions. As we know, some of the clauses before us today will push through even more exemptions, so that those who think that they will be enfranchised will find in practice that they are not.
We welcome the shift on the Prince of Wales clause. In the further discussions on the shift, as it were, on the low-rent test for flats and houses which the Minister promised to re-examine, we look forward to the operation of the two-thirds rule in smaller blocks as well. I hope that we can make progress tonight to enhance and extend the rights of leaseholders to enfranchisement, rather than restrict them and hedge them with exemptions, which the Government still seem to be doing.

Question put and agreed to.

Clause read a Second time and added to the Bill.

New Clause 2

PRINCIPAL RESIDENCE

`(1) Nothing in Chapters I and II shall be taken to confer a right upon the tenant of a flat to acquire a leaseextension unless the tenant occupies the flat as hisprincipalresidence.

(2) In relation to a claim for collective enfranchisement under Chapter I such a claim shall not be valid unless not less than half of the participating tenants occupy flats in the relevant premises as their principal residence.

(3) In this section "principal residence" means a flat which a tenant—

(a) occupies as his main or only residence; and
(b) has so occupied for the last three years or periods amounting to three years in the last ten years.'—[Sir Jerry Wiggin.]

Brought up, and read the First time.

Sir Jerry Wiggin: I beg to move, That the clause be now read a Second time.

Madam Speaker: I understand that it will be convenient to discuss at the same time the following amendments:

No.5, in clause 5, page 5, line 40, after 'rent', insert 'and

(a) occupies the flat as his principal residence, and
(b) has so occupied the flat for the last three years or periods amounting to three years in the last ten years.'

No. 10, in page 6, line 37, at end insert—

`(7) In this section "principal residence" means a flat which a tenant occupies as his main or only residence.'.

Sir Jerry Wiggin: It is a matter of considerable regret to me that the Bill is modelled on a Labour precedent, the Leasehold Reform Act 1967. That Act was passed only after its opponents on the then Conservative benches, led by Mr. Anthony Barber, forced major concessions and amendments on the Government.
A number of us find it difficult to accept that a Conservative Government are retabling a socialist measure which has been described by Professor Wade QC, who is acknowledged to be the United Kingdom's foremost administrative lawyer, as a form of
expropriation (which) can scarcely be said to have been for public purposes, since its object was merely to enrich certain tenants at the expense of their landlords.
However, we must accept that the principal motivation behind the Bill—to deal with abuses by landlords on leaseholders of flats—was contained in the 1992 Conservative manifesto, and neither I nor my right hon. and hon. Friends seek to renege on that promise. We seek a solution that is fair and equitable to all. The Bill is not. It is a sledgehammer to crack a nut; it is unjust.
On page 33 of the Conservative manifesto for the last election, under the title "Home Ownership", there is a preamble which outlines Conservative policy on housing:
Conservatives have extended the right and opportunity to own a home and pass it on.
I am sure that we all agree that that is one of the most important rights that an individual has in a free society.
In that context, the manifesto commits this Conservative Government to
giving residential leaseholders"—
I underline the word "residential"—
living in blocks of flats the right to acquire the freehold of their block at the market rate.
Those who see the matter in a different light have been quoting the manifesto at me, but the manifesto specifies residential leaseholders.
Similarly, the 1967 Act gives the right to enfranchise to tenants and leaseholders who occupy the property as their genuine home, and the 1966 Conservative general election manifesto committed Conservatives to providing choices for a ground leaseholder of residential property who had occupied the house as his principal residence for at least the last five years. One of the choices was the right to buy the freehold, but here Conservatives made it clear that the freehold should be purchased on the basis of full compensation to the freeholder.
In stark contrast, the Bill gives the right to enfranchise to any long leaseholder of a flat. It will therefore be possible for absentee leaseholders, corporations, foreign companies and speculators forcibly to acquire a freehold property at a discount. The Bill, as I propose to discuss later, offers inadequate levels of compensation to freeholders and allows leaseholders, in the words of my right hon. Friend the Minister of State, to acquire
an asset worth more than the price paid.
So the Bill goes much further than the Conservative manifesto. Its provisions are even more confiscatory than the 1967 Act and, perhaps most disturbingly, it sets a dangerous constitutional precedent by giving rights of confiscation not to genuine home owners who may in late life regret having willingly entered into a leasehold contract, but to any investor with an interest in leasehold property.
The Bill does not set out to nationalise property—after all, the beneficiaries are private persons—nor does it bestow the right of eminent domain, which would enable the compulsory purchase of property for a public purpose or public interest such as building a road. No public interest is served by the collective enfranchisement of leaseholders, many of whom will be corporations, absentee overseas leaseholders and speculators. I cannot believe that Opposition Members really believe that it is sensible

to pass legislation that benefits those classes of people. Instead, the interests of one set of private persons, the leaseholders, is served by the expropriation of the interests of another set of private persons, the freeholders.
Let us not imagine that all freeholders are dukes, vast estates or charities; many freeholders are single individuals who have invested in a block of flats or a house or have inherited the same. I have received a number of pathetic letters from people who will be seriously disadvantaged by the Bill, people against whom nobody could have any serious political angst. It is seriously wrong.

Mr. David Winnick: The hon. Gentleman paints a picture of poor freeholders, almost as people used to talk about "poor widows" when Rent Act protection was being discussed. Is he aware that one of the richest people in the country—sometimes described as the second richest person in Britain—the Duke of Westminster, has waged a campaign, obviously not among Labour Members but among Conservative Members? He has tried to do what he possibly can to persuade a sufficient number of Conservative Back Benchers to vote against the Bill. Is not the Duke of Westminster someone who has an interest in the matter and would feel much aggrieved if the Bill became law?

Sir Jerry Wiggin: The hon. Gentleman cannot make a case based on one individual, any more than I can make the opposite case based on another individual. The fact of the matter is that, if confiscatory legislation is introduced, surely the House should protect the rights of the individual, whether duke or pensioner. It has been a principle of long standing of the House that it protects the rights of individuals. It would be a great mistake for us to depart from that principle simply because one individual or case did not fit.
I should add that I have never heard the Duke of Westminster or his estate accused of being a bad landlord. But I am aware that many small landlords seriously abuse the law. Those are the people whom the Bill should get at. It should not seek to break up big estates or take people's property, at whatever level.
Britain has signed a European protocol which enforces certain rights and freedoms not included in section 1 of the European convention. Under article 1 of that protocol, the signatory Governments have agreed that
Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law".
The Bill deprives natural and legal persons of the peaceful enjoyment of their possessions—their freehold properties. If the Bill is to be accepted by the House, it must be amended to prevent a challenge under the first protocol.
The new clause sets out to achieve the aims that I have described. It includes the requirement that enfranchisement or lease extension will be limited to individuals who occupy the property solely for residential purposes and as their principal residence. Furthermore, he or she should so have occupied the flat for the past three years or for a period amounting to three years in the past 10 years.
In reply to anxieties properly expressed in Committee by my hon. Friend the hon. Member for Surrey, East (Mr. Ainsworth), the Government argued that the residential qualification
would considerably reduce the effectiveness of the proposals, not least because it would make it harder to achieve a two-thirds majority of qualifying tenants.
At the same sitting on 17 November, the Minister of State said:
It is not the object of the Bill to enable one investor in a property to enfranchise against another. Alternatively, such a person could block enfranchisement by other qualifying tenants in the building if the number of flats for which he was the qualifying tenant ensured that the requisite majority was never reached without his involvement."—[Official Report, Standing Committee B, 17 November 1992; c. 103, 113.]
The new clause ensures that, if the principal private residence qualification interferes with the majority needed for enfranchisement to be agreed, lessees who occupy as their genuine home should be given the right to a new long lease. It is a fair and sensible new clause, and I commend it to the House.

Mr. Battle: The hon. Member for Weston-super-Mare (Sir J. Wiggin) seeks Labour support, but I have to disappoint him and say that we cannot offer him support for this clause because we believe that enfranchisement should be extended and not hedged by further exclusion clauses. We wholly reject the contention that enfranchisement should be limited to leaseholders who have owned the property as their principal residence for three or more years.
If we can refer back, as we did in Committee, to the Consumers Association report. although it revealed that there is no uniform profile of leaseholders, it showed that a large proportion, about 90 per cent., of leaseholders had bought their flats in the past 10 years, and that three quarters of those surveyed had purchased their flats in the past five years. In other words, the practical import of the new clause is that, at a stroke, it would effectively render by far the majority of long leasehold flat owners ineligible to take part in an enfranchisement bid.
We think that the Government enfranchisement proposals are already too restrictive, but the knock-on effect of this clause would be arbitrary and unfair, and it would totally undermine the Government's intention in extending leaseholder enfranchisement. We have for a long time argued for leasehold enfranchisement,and we shall continue to argue forit—to be extended to everybody, not agreed in principle, as it were, giving a kind of rhetorical assent to a right and extending it as a rhetorical right and then undermining it by hedging it with more and more extensions. We see this new clause as further exemption, which would undermine the intention to enfranchise leaseholders.

Mr. Michael Jopling: I must first declare an interest, in that I own some domestic property which is let, but I am advised that none of it comes within the provisions of this proposal.
I support the comments of my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) in moving this new clause. This is the second time I have intervened in proceedings on the Bill. On the first occasion, the Secretary of State for Environment was kind enough to give way and I can do no better than repeat what I said then, that I can bring myself to agree, after much heart-searching, to legislation which forces people to sell their property when they do not want to. That, clearly, sometimes has to be done.
I am also just prepared to agree that, where people have entered freely into agreements without any pressure upon either side, those agreements freely entered into can be torn up, but my principal concern is about the level of compensation. We shall come to that a little later. But I do not like the proposals in this Bill. I find them basically offensive, and we shall come to the main reason why I find them offensive later.
I certainly find the provisions which are dealt with in new clause 2, together with amendments 5 and 10, very offensive, but that is because I do not see why it should be necessary at all to give a vast overnight windfall profit to people who have entered into agreements perfectly freely in the past. I cannot see why it is necessary for there to be a great moral crusade to allow the sort of bodies my hon. Friend referred to—corporations, investors, overseas residents, speculators and any others who happen to have a main residence elsewhere—to make vast overnight profits. We are all aware of foreigners who have houses or flats in London, for instance, and come to use them for relatively shortly periods of the year.
It is an injustice that those people should make, or in some cases, as the Bill stands, would make, vast overnight windfall profits just through the provisions of this Bill. I can think of no sensible argument, and have heard no sensible argument, that would justify giving such people of the opportunity presented by the Bill.
I strongly support what my hon. Friend the Member for West-super-Mare (Sir J. Wiggin) has said. Opposition Members are usually the first to seek to clobber speculators, overseas residents, investors and the like; I was astonished by the attitude of the hon. Member for Leeds, West (Mr. Battle), and I cannot understand why the Opposition do not support the new clause.
The provision in the Bill was not properly thought out. I understand that it was shuffled into the manifesto at the last minute, with the minimum of consultation and discussion. I do not think that it should have been included, but it is there and we shall have to honour it. I feel, however, that the House is perfectly entitled to trim it in the way proposed in new clause 2, moved so ably by my hon. Friend the Member for Weston-super-Mare.

Mr. Nick Raynsford: Let me spell out the simple, straightforward and fundamentally just reasons for proceeding with leasehold enfranchisement at a far more energetic pace than the Bill allows. We are talking about dismantling an archaic and unjust form of tenure which has disappeared almost everywhere in the world except in this country. Here, its continued existence buttresses the privileges of certain exceptionally wealthy people, who have been able for many generations to live on the money that they have extracted from land that they happen to own, on which other people's efforts built houses and other people's money paid rent.
Lest the hon. Member for Weston-super-Mare (Sir J. Wiggin) has any doubts, let me remind him that, as long ago as 1889, fear of the possibility ofleaseholdenfranchisement—then much in public debate—made the first Duke ofWestminster and his board decide not to renew leases. The writing was on the wall in 1889; it is sad that it has taken more than 100 years to reach this point, at which we are taking a significant step to dismantle an archaic and absurd form of tenure which has allowed a small number of people to become fat and wealthy at the expense of many others.
Let us look at the reality of the leaseholder's position. As the Bill stands, many leaseholders will find it impossible to exercise their right to enfranchise, because of the hurdles that they must overcome to qualify. They will have to establish that they themselves have a qualifying tenancy: that involves serious tests which we shall probably debate later, notably the low rent test, which may well prove an obstacle. They will have to establish that an appropriate percentage of the occupants are also qualifying tenants —in fact, two thirds ofresidentsintheblock—before they can proceed. They will have to establish that two thirds are willing to proceed with the enfranchisement; that no more than 10 per cent. of the accommodation is in non-residential use; and that there is no resident freeholder. All those serious tests will have to be passed if leaseholders are to benefit from the Bill, which is nowhere near as simple and straightforward as it should be.
If leaseholders negotiate those hurdles successfully, they must pay a significant price, allowing freeholders to obtain half the marriage value of the process for nothing. Let us hear no more cant about the poor unfortunate multi-millionaires who have lived off their landholdings for generations, and are now being required to dispose of them as part of the process of leasehold enfranchisement. We want a far more energetic pursuit of enfranchisement, and the removal of many of the obstacles that we shall discuss later. I sincerely hope that the House will dismiss this wrecking amendment for what it is—an attempt to impose yet another obstacle on leaseholders who deserve the earliest possible opportunity of enfranchisement.

Sir John Wheeler: I am glad to speak after the hon. Member for Greenwich (Mr. Raynsford) because on this occasion I agree with him and disagree with my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) and those who support the new clause. But then, I would, considering the constituency that I represent.
On the face of it, the proposed new clause looks sensible, and there must be many hon. Members who consider it to be a reasonable condition to place on those seeking to enfranchise. But some of the most dangerous things in life are disguised to look the most harmless. Anyone who knows anything about the housing market, particularly in central London, will be aware that, far from being an innocuous addition to this part of the Bill, the new clause would effectively wreck it.
I am sure that its proposers are not unaware that, if the new clause were adopted, the vast majority of leaseholders, certainly in my constituency, would be prevented from enfranchising. So we would be passing a piece of legislation that enabled leaseholders to gain control over their homes in principle, but prevented from doing so in practice. It would be a worthless piece of legislation.
The enfranchisement of blocks of flats is a collective action. A certain number of leaseholders must meet the criteria set out in the Bill if they wish to get together and exercise their right to enfranchise. By dramatically extending the scope of the criteria that must be met, the new clause would severely limit the number of cases in which sufficient qualifying leaseholders existed.
As the hon. Member for Greenwich said, hon. Members with first-hand knowledge of the need to reform the leasehold system feel that the hurdles that those

wishing to enfranchise must cross are already too high. They must have leases of over 21 years; they must pass the ridiculous and indefensible low rent test, a subject which we shall discuss later; they must have at least two thirds of the flats in their block enfranchiseable; they must not have more than 10 per cent. of the floor space in commercial use; they must have a two-thirds majority in favour of enfranchising; they must pay a disproportionate amount of the marriage value to the freeholder; and they must buy up excess flats if the freeholder so demands.
All those hurdles already combine to exclude many genuine long leaseholders from the provisions of the legislation. Consider the effect that the new clause would have. Westminster city council, which has virtually nothing but leasehold property in the city, is an ardent campaigner for leasehold reform. Unlike some of my hon. Friends who do not have leasehold properties in their constituencies, Westminster city council knows only too well the misery and hardship caused by the perverse leasehold system and is clear that the proposed additional hurdle would exclude the vast majority of leaseholders from enfranchising.
The reasons why the new clause would emasculate the Bill are simple. For example, it would exclude from the equation those who have not yet lived in their long-lease flats for over three years. But the housing market is never static, particularly in central London. There will always be a sizeable portion of leaseholders who have lived in their flats for one, two or just under three years. No sooner will one flat owner have crossed the three-year mark than another will move out, and the new leaseholder will again count against in the enfranchisement equation. Add the flats owned and used by businesses and the second homes of people working in London, of whom there are many in Parliament, and one appreciates how difficult it would be to cross the proposed new hurdle.
The danger of the new clause is that it would prevent those identified in it from enfranchising and would make it impossible for those who meet all the stated requirements to do so. These leaseholders would simply not be able to assemble the required proportion of qualifying leaseholders.
I realise that some of my hon. Friends may not want businesses to be able to buy and sell freeholds for speculative gain, but that has already been dealt with. My hon. Friend the Member for Weston-super-Mare is arguing a case which I contend would wreck the Bill. The amendment accepted in Committee would prevent any person or corporate body that owned two or more leases in the same block from taking part in any collective enfranchisement. That amendment stops property speculation. The new clause will virtually stop all enfranchisement, even by genuine long leaseholders. I urge the House not to support it. It is a wrecking measure, and it should be stopped.

Ms. Glenda Jackson: It is a pleasure to follow the right hon. Member for Westminster, North (Sir J. Wheeler) and my hon. Friend the hon. Member for Greenwich (Mr. Raynsford), because I endorse wholeheartedly the points that they so eloquently made about the new clause.
I must tell the hon. Member for Weston-super-Mare (Sir J. Wiggin), who spoke about individuals, that Opposition Members who served on the Committee are unstinting in their praise for the groups that have


furnished us with evidence about what it is like being a long leaseholder under the present law. I should like to list some of them. Under the heading of the Leasehold Reform Co-ordinating Committee, there are six organisations: the Commonhold Flats Campaign, the Consumers Association, the Council of Mortgage Lenders, the Federation of Private Residents' Associations, the Leasehold Enfranchisement Association and the National Consumer Council. All of them are concerned that the present law, which is inequitable and almost feudal in its exercise, should be changed.
We are much concerned that the Government's proposals are far too narrowly drawn. The hon. Member for Weston-super-Mare regards the Bill as a measure of expropriation. I have received a copy of a letter written by someone who really knows what expropriation is about. She came here as a refugee from Hungary in 1948, and she says:
Good God, how different that was from the expropriation threat to the Duke of Westminster".
She and her family had everything taken away from them:
You woke up one morning and found that you had nothing,
not even the coat on one's back. The right hon. Member for Westmorland and Lonsdale (Mr. Jopling) described the Bill as offensive. The lady who came here as a refugee from Hungary finds the low-rent test deeply offensive, as do Opposition Members.
What is it really like for people who are leaseholders, for instance, on the Cadogan and Grosvenor estates? The Cadogan estate had every intention of evicting a leaseholder after she had been in her home for 43 years—despite her repeated but unsuccessful appeals to the estate for a negotiated settlement. Once legal proceedings started, she claims that the estate obstructed her at every turn, wore her down to the point of extreme exhaustion and landed her with annihilating costs—to such a degree that she was eventually forced to withdraw from the case.
A leaseholder on the Grosvenor estate carried out extensive building improvements. This is a recurring theme in all the evidence that we have received from associations and individuals. Leaseholders are responsible for the upkeep of their property; for the repairs, decoration and security of their homes. In many instances, they pay large amounts—

Mr. Geoffrey Clifton-Brown: I think that the hon. Lady is incorrect in citing those two cases. Even under existing law, all leaseholders are protected by the Rent Act 1977 and there is no way that the lessor could throw out either of those lessees.

Ms. Jackson: The hon. Member for Weston-superMare said that it was a battle between equals. I was attempting to point out that it is anything but that. It is a battle between leaseholders and the might of the major estates. In the second instance that I referred to, the lease was running out and because the estate categorically refused to consider an extension, the lessee submitted that evidence.

Sir Jerry Wiggin: Surely the hon. Lady agrees that in my opening remarks I ceded the argument about landlords who abuse their tenants and that something had to be done

to put that right. Does she not agree that her argument has failed on one important point of information—that the lease is a voluntary contract for every leaseholder?

Ms. Jackson: Wherein lies the equality in entering an agreement freely, when the definition of what constitutes the contract inevitably lies in the hands of the freeholder?
Despite his intervention, I must disagree with the hon. Member for Weston-super-Mare. The estates are financially immensely powerful and can employ the best that the legal profession is able to offer, which is not the case for the leaseholder.
The leaseholder on the Grosvenor estate had carried out such extensive building improvements to his home that he could have been eligible to apply for the freehold. As in so many cases, the estate decided to fight the application. The leaseholder had limited resources and a family of five and had to abandon all thoughts of taking action. That is why the Opposition oppose the new clause. The requirements for enfranchisement drawn on the fact of the Bill by the Government are infinitely too narrow and restrictive, but the new clause would make a mockery of the Bill and of the House.

Mr. Nigel Waterson: I am delighted to add my voice to those who oppose the new clause and, although I am advised that it is not an interest, I must mention that I own a leasehold flat in my constituency.
To take up the argument of the hon. Member for Hampstead and Highgate (Ms. Jackson), like anyone who tries to acquire a flat, I had no choice when I entered into the contract because I could not obtain a freehold. I share that burden with people who live in England, Wales and Hawaii, as those are the only countries which have the leasehold system—not even our friends the Scots have ever gone down the leasehold route in the way that we have done.
I fervently support the remarks of my right hon. Friend the Member for Westminster, North (Sir J. Wheeler), who said that this is a wrecking new clause. I agree that it would emasculate this new, important and useful Bill, and that it is totally contrary to the spirit of the legislation. I should be doing a disservice to my right hon. and hon. Friends who tabled the new clause if I did not suggest that they were well aware of that when they tabled it.
Many people have leasehold flats in constituencies such as Eastbourne and other resorts along the south coast. Many use them as holiday properties or have them in mind for their retirement. Often people of slender means have invested their money in those new homes. Under the new clause they would be told that they are not allowed to purchase control—the freehold—of their homes and they would not even be entitled to an extension of the lease. The new clause would effectively make them second-class citizens, despite an enormous capital outlay to purchase the leasehold and to pay for maintenance and repairs. Many people want to buy such homes, particularly for their retirement, and would like to own the freehold.
Given the collective nature of enfranchisement in blocks of flats, as my right hon. Friend the Member for Westminster, North said, the new clause would prevent enfranchising by leaseholders who might meet all the relevant criteria but would be unable to assemble the proportion of flats required for a block to enfranchise.
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Retirement flats will count against the other leaseholders, which will discriminate against my constituents and those of my colleagues who represent towns on the south coast. Leaseholders who moved in to their flats one, two or three years ago will count against them —and think how many people in any one block will not have lived there for three years. The housing market is such that there will always be some flats in a block that are owned by people who have not lived there for the length of time proposed in the new clause. All flats owned by businesses will count against them, as will flats whose owners have rented them out for the short term arid flats owned by people who are temporarily working abroad.
One can readily see why the new clause would bring such comfort to people who are fundamentally opposed to the concept of enfranchisement. The clause would exclude not only people who could not claim their flats to be their principal residences—perhaps for the best of reasons—but most of those people who can.

Dame Jill Knight: I have been following my hon. Friend's argument carefully, but I do not understand why he thinks that someone who has lived in a flat for three years and has established it as his or her principal residence, would be unable to apply for the freehold under the Bill. By then, the leaseholder would have met all the conditions necessary for the purchase.

Mr. Waterson: Given the constant turnover in a block, there are bound to be people who have not lived there for the requisite amount of time, and a majority is required.

Mr. Patrick Nicholls: My hon. Friend seems to have a fair point. Many people want to move within three years. If there were no time qualification, but merely a statement that the flat should be occupied as a main residence, it would tie in with the manifesto on which we both fought the last election. It seems to me that the removal of that qualification might cheer up my hon. Friend. Would he care to comment on that?

Mr. Waterson: As my hon. Friend knows, I am a cheerful sort of fellow and that might give me a modest amount of cheer, but I still have a fundamental objection to the new clause, with or without the three-year restriction.
Even Opposition Members have grudgingly accepted that the legislation is important and beneficial for leaseholders, and I believe that as many people as possible should be able to reap the benefits.

Mr. Battle: I cannot allow the hon. Gentleman to suggest that we are grudgingly supporting leasehold reform. We are actively campaigning for it. We have been looking forward not only to the hon. Gentleman's speech on the new clause, but to his voting for our new clause to widen and enhance leasehold enfranchisement.

Mr. Waterson: I am delighted to accept support from wherever I can find it in the House. I wonder whether I can take it from the hon. Gentleman's remarks that, unlike on Second Reading, he and his hon. Friends will vote for the legislation on Third Reading. The hon. Member is uncharacteristically silent on that issue. No doubt we shall hear more from him later.
The point I was making was that the new clause would exclude not only those who could not claim their flats to

be their principal residences, but most of those who could legitimately do so. Its ramifications reach far beyond those who are mentioned in the new clause. I believe that if it were allowed to pass, it would wreck this legislation.
When my hon. Friend the Member for Weston-super-Mare speaks of socialist legislation, confiscation, and so on, he is, I believe, missing the fundamental point. This issue is not really about the great London estates; it is about individual, often retired, folk in places such as Eastbourne who have put all their savings into a piece of property which is, in effect, a wasting asset; people who, like myself, when they came to acquire a flat in that constituency had no choice but to take leasehold.
As I have said, this applies only in England and Wales and, I think, Hawaii. It has always been an indefensible system and I am delighted that this legislation will sound its death knell.
I am therefore happy to oppose the new clause on behalf of my constituents and those of many other right hon. and hon. Members.

Mr. Nicholls: I start by declaring my interest in Port Enterprises Ltd., the Waterfront Partnership and Howard de Walden Estates Ltd., and the fact that I have a flat in London on a long lease.
One thing that has become starkly obvious in the debate is that my right hon. and hon. Friends on the Front Bench have found themselves deriving comfort, and indeed votes, from some strange quarters. It must have been obvious to all of us that, although the Opposition are apparently entirely behind the Government in opposing this new wrecking clause, they are working to a different agenda and marching to a different tune.
I know why I am in favour of the Bill and why I voted for it on Second and Third Readings. The reason was set out in a very straightforward manner by my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin), who opened the debate. I thought that this was all about ensuring that residential home owners were enabled to buy their own homes. That carries with it some rough justice, because ultimately it means that some people will be deprived of their property against their will. As a Conservative, I do not particularly like that, but politics is an imperfect trade and this is an imperfect world, and sometimes one has to balance interests. It certainly seemed to me that the greater Conservative interest was met by home owners being able to own their own homes. So far, so good.
What we heard from the hon. Member for Greenwich (Mr. Raynsford) was an entirely different tune. He is in the business of reversing history. He has a jolly, romantic and completely ridiculous view of history. He wants to divest dukes. That is what he thinks this is all about: robbing the robber barons. I dare say his view is sincerely held, but it is quite potty. When my right hon. and hon. Friends on the Front Bench suddenly find that hon. Gentlemen are all in favour of opposing this clause, I hope that they will pause and reflect that, although misery is supposed to acquaint one with strange bedfellows, it is a bit odd to have to rely on that sort of support to get legislation through.
I am extremely grateful to my right hon. and hon. Friends for the care that they have taken in listening to the representations that I have made in recent months. It must be said—I hope that this will not embarrassthem—that


they have come a considerable way towards meeting the substance of the objections that we have been hearing from these Benches this evening.
As long ago as 14 August, my hon. Friend the Under-Secretary of State wrote a very helpful letter to me. In view of some of the remarks that have been made in this debate, I ask whichever of my right hon. or hon. Friends will reply to confirm that this is still the position. My hon. Friend said in his letter:
You were concerned that the present proposals would enable long resident leaseholders, including corporate bodies and professionals, to enfranchise. I explained that we had already decided that commercial tenants would not be qualifying tenants for the purposes of enfranchisement.
I have no reason to doubt that that remains the position. I have come to the House today believing that to be so and if by any chance it is not, I hope that that will be made clear in the winding-up speech.
It was clear that, even after that undertaking, there was a risk that one form of commercial investor would be able to enfranchise against another form of commercial investor. I put that point to my right hon. and learned Friend on Second Reading and he was kind enough to say that he would look into it.
Subsequently, in Standing Committee, my hon. Friend the Member for Surrey, East (Mr. Ainsworth) tabled an amendment that dealt almost entirely with the point. I commend my hon. Friend, because it was a remarkable piece of draftsmanship. Interestingly, it accorded exactly, it would appear, with the Government's thoughts on the matter after my intervention on Second Reading. In Standing Committee, that clause was accepted and the substance of it was that a head lessee cannot be the qualifying tenant of more than one flat in a block for the purpose of enfrachisement. It is a lawyer's point, but none the worst for that. It took some time for that to come; it arrived because of representations made throughout the month, and it is very welcome.
It seems to me that it is only a small step from there to asking whether anything needs to be done, in addition to my hon. Friend's amendment, to tidy things up a bit. The way that I would have tidied it up is in amendment 115, which, for reasons of I know nothing, finds itself in a forlorn position further down the list of amendments, perhaps because of the way in which I tackled it. In substance, if not in reality, it belongs in this group of amendments.
I was seeking to achieve the acceptance of a residual qualification that the home must be a person's principal or primary residence. That would seem to accord exactly with what was in the manifesto, because it talked about residential home owners. This is in no sense a novel concept; it is known already. It is known for the purposes of MIRAS and of the capital transfer tax laws. It is also known for the purposes of the Landlord and Tenant Act 1967, which, to some extent in our deliberations, has now achieved a status close to that of a bible. People dine a la carte on it where it seems to be in their interest to do so. Therefore, I will do the same and commend the 1967 Act in this respect at least, because it makes the case and accepts the concept of a principal primary residence.
What can be the objections to that concept? I know what the objections will be from the Opposition; they have been expressed with great eloquence and sincerity. I also

appreciate that some constituency pressures may produce a particular approach to it in other parts of the Chamber. But, from the point of view of the manifesto that we walked the streets of England, Wales and Scotland advocating, what could be wrong with the concept of principal primary residence? I know that in due course my hon. Friends will be telling me what the objections are. Happily, in the light of correspondence that I have had with them, I can perhaps give an answer in advance to some of their objections.
The proposal is supposed to be novel and complicated. Well, it is not. A more serious and worthwhile objection that certainly must be addressed is that there is no doubt that some people in a block would find it harder to enfranchise, and I accept that that is a problem that must be dealt with. I made that point on Second Reading and I said that there would be lots of time for officials, with all the resources of intellect and ingenuity available to them, to come up with a solution to that problem.
I even, as a humble country lawyer from the backwoods, suggested one way in which they might proceed. They could say that, if a person in a block was unable to enfranchise because of this proposal, he should be entitled to a long lease. That would not have been quite the same as full ownership, but it would have been very much further towards it and would have made sure that the policy objective set out in the manifesto would have been achieved. If that is not feasible for some reason, I look forward to hearing why. The point is that there has been sufficient time to think how that might be taken forward.
What other objections might there be? One suggestion, as I understand it, is that it is really all a bit of a misunderstanding, because, if people are conducting a business when they are essentially in a residential context, they must be in breach of a planning law. If that were the case, one could tootle along to the local planning authority and say that those people are not really residential, but are running businesses. Perhaps one could, and perhaps one could not; I neither know, nor, frankly, do I care.
I do not see why one should have to use the planning laws as an instrument of property protection. It is perfectly clear that, a long time before there was any such thing as planning laws, head lessees sold leasehold interests in property. We are now in the business of home ownership, yet we find that there are places where there are no homes at all. Let us take, for instance, a Harley street doctor. For the purposes of equality, I suppose I had better talk as well about the Manor House hospital which prominent trade unionists use; I would be out of order in going too far down that road, so I will leave it.
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Anyone who has ever been to see a Harley street doctor does not believe that he actually lives in his house in Harley street. He is into hot bunking; he is virtually into revolving brass nameplates outside. It is a rabbit warren. It has nothing whatever to do with residential accommodation and everything to do with business accommodation. It does not matter what the planning laws say; the reality is that someone who is a business person will suddenly find as a result of the legislation that he will be in a position to enfranchise. I cannot believe that that was the intention of my right hon. and hon. Friends when they introduced these proposals.
On my final point 1 must part company with my hon. Friend the Member for Weston-super-Mare. Someone who can move within three years these days is lucky, but there could be a problem about setting a three-year qualification period. The way to address the problem is simple, although it would make things harder for the landlord. Let there be a qualification without time limit, so that, the instant someone buys, it becomes the principal private residence. That would take care of the practical abuse.
When we have gone to the country with a commitment to do something to help residential home owners, I do not understand how business use can get in on the side. The Government have done so well in listening to the representations, in making the concession that was made in correspondence in August, and in dealing with the point made in Standing Committee by my hon. Friend the Member for Surrey, East (Mr. Ainsworth), that it would not take very much for them to get it exactly right. Were they to do that, they would know that they have done the right thing because of the undying abuse and criticism of the Opposition. I should like to think that they would feel consoled when they heard that.

Mr. Michael Stern: Many points have already been made in the debate, so I shall be brief. May I disabuse those Opposition Members who believe that the Bill is about getting another kick at nasty landlords? That has come through clearly in their speeches. The socialism of envy has been prominent on the Opposition Benches, particularly from the hon. Members for Greenwich (Mr. Raynsford) and Walsall, North (Mr. Winnick), who is no longer in his place.
A number of people—not a large but a significant number—on retirement, perhaps after selling a small business or after saving for a number of years, invest their savings funds not in a leasehold flat but in freehold reversions. That is not illegal, or even immoral. It was a way of investing money over a long period to provide a fixed income through what was regarded as a safe investment.
The reason why I and some of my hon. Friends are doubtful about some aspects of the Bill is that we can see the life savings of those small investors being significantly devalued by the provisions of the measure. While I accept the principle of the Bill—I voted for it on Second Reading and I shall support it on Third Reading, because it increases the availability of freehold property to a substantial number of people—we should be wary of confusing that principle with using the power and force of Government to make financial adjustments between landlord and tenant. That is why I look forward to a discussion later on the extent to which marriage value is to be divided between the two.
I raise the point on the new clause because there has been much discussion about the meaning of residence. All of us have different views about the extent to which residence as such, or residence over a period, needs to be a qualification under the Bill. I take issue with my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) on one detail of the proposed new clause, in that I know of many people, some of them hon. Members, who live in flats in London during the week and in homes in their constituencies at the weekend, but who for tax or whatever purposes regard their constituency home as their principal private residence. I can see no reason why such

people should be debarred from enfranchisement under the Bill, despite the fact that technically the flat that they are trying to enfranchise is not their principal private residence.
When I lived in a block of flats in the constituency of my right hon. Friend the Member for Westminster, North (Sir J. Wheeler), I found that on the two floors where I knew the tenants well—the floor that I lived on and the floor beneath—I was the only tenant who was not occupying a company let. I have no idea who the landlord was. He might have been one of the dukes referred to in such slighting terms by Opposition Members, or he might have been a private investor. All the other tenants were there because they were occupying flats for the benefit of the companies for which they worked.
I do not object to those people having votes or not having votes when it comes to enfranchisement. What I question is their reason for playing any part in the process. If we are dealing with something as fundamental as the right of the occupier of a flat to enfranchise and become a freeholder, and the right of the ultimate freeholder to receive a fair price for the freehold reversion, what possible interest does a company tenant have in the process on either side? Why should the votes of the temporary or permanent companies who are renting for business purposes determine the financial adjustment between the long leaseholder and the freeholder? We are ignoring the legitimate rights recognised by the Government in their election manifesto and allowing disinterested third parties to determine who should get wealthy and who should become poor.

Ms. Tessa Jowell: I join hon. Members on both sides of the House in opposing the new clause, specifically because of the undesirability of creating any greater obstacles than those which already exist and which will not be removed by the legislation for leaseholders wishing to enfranchise. This has been of great concern not only to me but to my predecessor, Gerry Bowden, who was a strong advocate of commonhold, as I am, and before him to Sam Silkin. It has been a chronic problem, so far unresolved by legislation, in dealing with the fraught relationship between leaseholders and freeholders.
The provisions are modest and do not extend to commonhold. They do not provide adequate protection against poor management and negligent freeholders, a situation brought vividly to my attention by the case of a constituent whose experience bears out the conclusions of the recent study commissioned by the Joseph Rowntree Foundation.
My constituent has suffered exploitation by a large south London freeholder managing agent. She found it impossible to identify other leaseholders in a similar position. She was a woman of average means and, in her own words, she was forced to scrape together money to buy a flat due to to the chronic shortage of affordable accommodation to rent. Since that time, she has paid the freeholder whatever was asked of her in ground rent, management fees and service charges.
As yet, services are non-existent. Urgent repairs are not carried out. Worse still, repairs have been started and have never been completed. For most of the last six months she has had no steps up to her front door, the steps having collapsed last August. She has been in the ridiculous position of having to spend many hours negotiating with the freeholder to get that work completed.
I suspect that that picture is repeated across London and it remains a major failing of the Bill that leaseholders excluded from enfranchisement are not more adequately protected in law against the bad practice of freeholders. As the Bill is already inadequate in the protection that it extends, I hope that hon. Members will oppose the new clause.

The Secretary of State for the Environment (Mr. Michael Howard): In moving the new clause, and speaking to the amendments grouped with it, my right hon. and hon. Friends have touched on a number of important issues of principle concerning the Government's proposals for leasehold reform. I well understand why they have approached the matter in that way. Their concerns are legitimate and I hope that I shall be forgiven if, before dealing with the residency test, I put the debate in a wider context.
The proposals in part I are aimed primarily at giving the owners of flats the opportunity to enfranchise. The Bill stands in a long line of measures that Parliament has introduced to regulate the relationship between landlord and tenant. From time to time, Parliament has judged it necessary to intervene to change the balance of rights. Inevitably, that has an effect on the expectations that the various parties might have enjoyed and must necessarily mean interfering with pre-existing property rights.
It was a Conservative Government who instituted the most radical reform of our land tenure system since Edward I legislated in 1290. The 1925 package of legislation—the Law of Property Act, the Settled Land Act, the Land Registration Act and the Land Charges Act —had the effect, among other changes, of abolishing many anachronistic forms of land tenure and simplifying conveyancing procedures in favour of purchasers. The Landlord and Tenant Act 1927 gave business tenants new statutory rights against their landlords and the Landlords and Tenant Act 1954 extended that protection to residential tenants. All those measures were passed by Conservative Governments. Residential tenants under long leases now generally have the right to hold over as statutory tenants at the end of their leases. Those legislative Acts necessarily applied to pre-existing leases and were introduced to deal with the practical problems that resulted from the operation of the leasehold system.
Enfranchisement has been a matter of concern and debate for more than a century. The first Bill to provide a right to enfranchise was introduced in 1884. The Conservative party promised enfranchisement on fair terms in its manifesto for the 1966 election, although a Labour Government introduced the Leasehold Reform Act 1967. The Conservative Opposition welcomed the principle of that Act, although they had grave concerns about the basis of compensation that it introduced. I hope to say more about that when we debate the amendments on the valuation.
In 1974, the Conservative Opposition moved amendments bringing medium-value houses within the scope of the 1967 Act, although on a new and fairer valuation basis. Conservative Members have consistently taken the lead in bringing the concerns of their constituents to the attention of the House. My right hon. Friend the Member for Westminster, North (Sir J. Wheeler), my hon. Friend the Member for Kensington (Mr. Fishburn) and his

predecessor, the late Sir Brandon Rhys Williams, and the predecessor of the hon. Member for Dulwich (Ms. Jowell), Gerry Bowden, lost no opportunity in pressing the case of their disadvantaged constituents, and the Bill is primarily a response to their concerns.
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The Bill takes enfranchisement a step further. Almost all owners of leasehold houses have had the right to enfranchise since 1967 or 1974. The Bill extends that right to many of the 750,000 or so owners of leasehold flats. They will be able to buy their freehold at a fair market price.
Flat owners face two serious problems. The first is that their lease is a wasting asset which, once it has fewer than 60 years to run, becomes difficult to mortgage and hence to sell. The second is that, although they pay all the costs of maintenance, they are in the hands of the freeholder when it comes to getting work done. This gives rise to many difficulties and complaints, as independent research and the evidence of many letters from constituents has shown.
In English law, there is no satisfactory alternative to leasehold ownership for flats. Commonhold will remedy that in due course, but alongside commonhold we need a mechanism for existing leaseholders to take control of their own homes.
Because the nature of a flat is different from that of a house, the right can be exercised only collectively rather than individually and it will apply only where certain qualifying conditions are satisfied, to ensure that enfranchisement takes place only where tenants can be said to have the greater interest in the property—essentially, where two thirds of the flats in a block are let on long leases at a low rent. Where a building does not qualify for collective enfranchisement, there will instead be a right for qualifying tenants to extend their leases at market price, which will at least deal with the problem of the lease as a wasting asset.
The Bill also extends the right to enfranchise to those few high-value houses that remain excluded from the 1967 legislation on the basis of their rateable value. Again, we shall debate that matter later this evening.
The amendments and the new clause seek to introduce a residency test for the enfranchisement of flats. Amendments Nos 5 and 10 would mean that a tenant of a flat would not be a qualifying tenant unless the flat were used as a principal residence and had been occupied as such for the previous three years or for three years out of the previous 10. The new clause uses a slightly different approach. The right to lease extension would be available only where the tenant satisfied the residency test, but for collective enfranchisement at least half the participating tenants would have to satisfy that test.
The Bill does not propose a residence qualification for the enfranchisement of flats, because it is a collective rather than an individual action. That is the second of the reasons that were identified in advance by my hon. Friend the Member for Teignbridge (Mr. Nicholls). Tenants must already clear two hurdles before they are entitled to enfranchise: first, two thirds of the flats in a block must be held on long leases at low rent; and, secondly, of those qualifying tenants, two thirds must wish to participate. The amendments would make it significantly more difficult for tenants to clear those hurdles. If tenants are disqualified unless resident, it will be more difficult to


satisfy the first test. If in order to participate at least 50 per cent. must be resident, it will be more difficult to pass the second.
The reason is that, like other people, those who live in flats move from time to time. If there were a residency test, at any one time a number of flat owners would still be completing their period of qualification. If, on average, people move every nine years, typically one third would fail a residency test at any one time. A block that may be entirely occupied by home owners living in their own homes could hover between qualifying for enfranchisement simply according to the pattern of moves.
Genuine long-term owners of flats in the block might never have the chance to enfranchise, simply because, whenever they come near to establishing the necessary majority, one of their neighbours moves. Indeed, the worst managed blocks, which experience the most difficult problems with maintenance or exploitation of service charges and from which people move as soon as they can, may experience the most difficulty in qualifying.
There is also the possibility that some freeholders might use the existence of the residency test to defeat the right to enfranchise. There are instances at present where landlords have refused consent to assign a lease other than to a company, purely with the object of taking a house outside the scope of enfranchisement. If they were able to do that with one or two flats in a block, they could deny other tenants access to the collective right.
We have already accepted an amendment in Committee which will prevent anyone owning more than two flats in a block from enfranchising. That will eliminate the risk that speculative landlords may be able to enfranchise against the freeholder. To go beyond that and to include a residency test would make the right to collective enfranchisement, given by chapter I, unenforceable by many tenants who can themselves meet the residency test and all other requirements.
I accept that the case against a residency test for lease extension is not so strong. It is an individual right, and the same difficulties of assembling a sufficient quorum to exercise the collective right do not apply. I accept the force of the argument put to me by my right hon. and hon. Friends on that point and I am prepared to undertake to table an amendment at a later stage which would have the effect of applying a residency test on the same lines as that which currently applies to houses in the provisions of chapter II.
I hope that my right hon. and hon. Friends will accept that I understand what lies behind their concern. I have tried to meet it where it would not imperil the fundamental purpose of the legislation. On that basis, I urge the House to reject the new clause and its associated amendments, which would apply a general residency test and would make chapter I unenforceable for many people.

Sir Jerry Wiggin: I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 3

SAVING FOR CHARITIES

`There shall be no right under Chapters I or II to acquire any interest in or new lease of any property which is held by or in trust for a charity within the meaning of the Charities Act
1960.'—[Sir Jerry Wiggin.]

Brought up, and read the First time.

Sir Jerry Wiggin: I beg to move, That the clause be now read a Second time.

Madam Deputy Speaker: I understand that it will be convenient to discuss at the same time the following amendments: No. 4, in clause 4, page 5, line 30, at end insert—
`( ) This chapter does not apply to premises of which the reversioner or any relevant landlord is a charity within the meaning of the Charities Act 1960.'

No. 6, in clause 5, page 5, line 43, leave out from 'lease' to 'or' in line 45 and insert
`or a relevant landlord is a charity within the meaning of the Charities Act 1960;'.

No. 7, in page 6, line 4, at end insert
'or
(d) the lease is of a flat forming part of premises of which the freeholder is a charity within the meaning of the Charities Act 1960'.

No. 8, in page 6, line 5, leave out from beginning to end of line 7.

No. 12, in clause 59, page 63, line 42, at end insert—
'(3) This section shall not apply to any house and premises of which the landlord is a charity within the meaning of the Charities Act 1960.'.

Sir Jerry Wiggin: The new clause and the amendments deal with a single point. It was clear from the previous debate that opponents of my view and that of my colleagues on this issue were seeking to build some of their case on the iniquities, or otherwise, of individual landlords who are frequently quite blameless. We heard the story of big estates.
The purpose of the new clause is to exempt charitable freeholders from the Bill's provisions. I acknowledge that it will not be difficult to make an intellectual case that charities should not be treated any differently from other landlords. However, Henry Smith's Charity, a very big charity which owns a large chunk of London, has made representations which it is reasonable to air.
Henry Smith's Charity distributes about £12 million a year to medical charities, hospitals, hospices, medical research, to the mentally and physically disabled and other social welfare organisations, such as those dealing with the young and the elderly and those providing services for drug and alcohol abusers.
To put that in context, about half the charity's income comes from Henry Smith's Kensington estate, which is centred on Onslow square and which has been owned by the chairty for many years. I shall argue later about the compensation terms, but Henry Smith's surveyors have done a calculation dealing only with Onslow square. It shows that, if the Bill is passed with its current provisions for compensation, the windfall gain that will accrue to tenants in that area alone will exceed £2 million. That means that £2 million of charitable money will be removed from the charity and handed to the leaseholders as a windfall. That seems unfair.
I have received other representations from charities, usually of an institutional type such as university colleges, which have for many years held property as part of their portfolio. I have not heard any hon. Member who supports the Bill say that such organisations fall into the category of bad landlords. That is far from the truth. Such organisations have been trying to preserve their investment for charitable purposes, and it is wrong that the Bill should apply to them. I believe that the case for other charities is self-evident, and I do not need to elaborate further.

Mr. Raynsford: I wish to respond to the specific point made by the hon. Member for Weston-super-Mare (Sir J. Wiggin) about Henry Smith's Charity and its activities in south Kensington.
I worked in the area for many years and frequently saw a large notice board displayed by an aggrieved leaseholder, proclaiming that Henry Smith's Charity was corrupt and should be investigated. That individual may or may not have had good reason for his point of view which he displayed so forcefully for several years, but it certainly suggested that there were grounds for concern about whether the kindly named Henry Smith's Charity was entirely blameless.
More recently, I have received from Pelham residents association a list of leases in that area which have been disposed of by the charity. When moving the previous new clause, the hon. Member for Weston-super-Mare said that it would be wrong to allow companies, speculators and others to benefit from the enfranchisement provisions. However, according to the residential residents of that area of south Kensington, it has been a deliberate policy of that charity to dispose of leases, which have been occupied by normal families in residence for many years—for hundreds of years in some cases—to companies.
I have a schedule of the current leaseholders in that area. No. I Pelham crescent has been leased to Rubyquote Ltd.; No. 3 to Howden Management and Data Services Ltd.; No. 6 to Credit Du Nord Societe Anonyme; Nos. 18 and 19 to Intro Properties (U.K.) Ltd.; No. 21 to First National Bank of Boston; and Nos. 27 and 27a to Moyna Holdings Inc. No. 1 Pelham place has been leased to Great Lakes Carbon International Ltd.; No. 2 to Kirkdale Ltd.; No. 11 to Eastwyn Sales Corporation and No. 29 to Merat Holdings Ltd.
Henry Smith's Charity may believe that it is in its interests to dispose of large numbers of their holdings to companies.

Mr. Dudley Fishburn: Only this week, a constituent of mine who has the disadvantage of being an Englishman and an individual was refused a lease by Henry Smith's Charity because he had a millstone around his neck—he has to be a company to acquire a lease.

Mr. Raynsford: I am grateful to the hon. Member for that intervention, which reinforces the point that the policy being pursued by this supposedly charitable body works explicitly against the interests of people seeking residential accommodation in the area of London in which it has so many landholdings.
It may be in the charity's intersts to let its properties to non-residential occupiers and to companies, but it is pretty rich for some hon. Members to argue that the charity should be exempt from these provisions on the ground that it is doing wonderful charitable works. If the charity chooses to pursue these policies for commercial gain, it has only itself to blame if the House rightly decides that the Bill should apply to it as it does to everybody else. It will be entirely justified for the leaseholders of Henry Smith's Charity in south Kensington to have the right to enfranchisement and not to be debarred, which would be the impact of the new clause.

Mr. Michael Alison: My right hon. and learned Friend the Secretary of State knows fairly intimately, as a result of my correspondence with him and as a result of some of our conversations, about the considerable disenchantment that the Church Commissioners, a parliamentary charity, feel about the draconian obliteration of their long-standing leasehold interests in properties in various parts of London. My right hon. and learned Friend has been kind enough to look not without sympathy—although, alas, without a specific response so far—at the urging, expressed in the new clause, that charities should be removed from the scope of the Bill.
It is worth pointing out to my right hon. and learned Friend and to the Minister of State that charities which, in the nature of things, have an indefinite lifespan that stretches from here to eternity—certainly that is true of the Church Commissioners—[HON. MEMBERS: "Commissioners?"] That was a slip of the tongue. I meant the Church Commission as a body. The Church Commissioners individually do not stretch from here to eternity.
For charities such as the Church Commission, 99 years is a small drop in the ocean of time of their lives and work. It becomes rational for charities such as the Church Commission to extend, to develop, to maintain and generally to sustain all their capital assets, which they develop and hold entirely for the advantage and benefit of certain limited beneficiaries. For the Church Commission, those beneficiaries are serving clergy, retired clergy and their dependants.
It remains reasonable for such charities to maintainleasehold properties, from which they take out initially a full or almost full market value, leaving aside the ground rent, over a 99-year lease period—99 years is a drop in the ocean of time from their point of view—and to look steadily forward to a reversionary interest as the period comes to an end. Charities are then once again presented with the opportunity to use their reverted properties to raise money, entirely for the benefit of their worthy beneficiaries and their dependants.
It was rational for bodies such as the Church Commissioners to have some property leases in their portfolio of assets. The Church Commissioners have maintained their leasehold interest in properties in good faith, believing that they did nothing but good both for the leaseholders and ultimately for their beneficiaries.
The Bill will narrow the scope for charities such as the Church Commission because it will suddenly remove opportunities from them and the potential for asset investment of this sort will be obliterated. It is neither necessary nor desirable that my right hon. and learned Friend's reform should extend to that particular type of charitable leaseholder, which includes leaseholders of properties owned by the Church Commissioners and by Henry Smith's Charity, merely because the justification for other aspects of leasehold reform may be more sustainable.
I urge my right hon. and learned Friend to consider whether it is really necessary to sweep up charities, which have a special dimension, in the Bill. If there is no escaping his final scything action against the Church Commission and other charities, and if my right hon. and learned Friend is determined to sweep away this perfectly attractive and desirable type of property ownership, I ask


him to consider at least one little modification. If, after careful study, the modification appeals to him and seems reasonable, perhaps he will tell me that he will make the necessary changes to the Bill in the other place so that we need not press the new clause.
I mentioned the modification to my right hon. and learned Friend in conversation not long ago. He should exclude from the scope of the Bill leasehold owners—we have a few in the Church Commission properties—who are company leaseholders. Earlier exchanges dealt with Henry Smith's Charity's excursions into the realm of company ownership. The Church Commissioners have a few company leaseholders which we nominated as leaseholders entirely because, at the time of nomination, the Rent Acts made it difficult to recover let properties unless they were let to companies.
There was quite a development in company letting to avoid the squeeze of the Rent Acts. One result is that a small number of Church Commission leaseholders are companies that have taken up long leases. They have used properties essentially for the benefit of their visiting clients and of their visiting customers.
There seems to be no good reason why those companies, which are non-individual and non-personal leaseholders, should get the benefit of enfranchisement. I hope that my right hon. and learned Friend and my hon. Friend the Minister of State will agree that the small group of leaseholders involved, at least so far as the Church Commission is concerned, may be excluded from the scope of the Bill by an appropriate amendment in the other place.
Such leaseholders have no personal issues at stake, no personal pressures and no personal needs. There is no individual dimension in the small group of company leaseholders. They would not suffer and they would be perfectly content that their position should remain the same. Such leaseholders do not yearn for the personal security of a home of their own or for something to leave to their children. They take out the leasehold entirely as a commercial venture for the benefit of their business and clients. They do not mind whether they own the property completely or whether they continue as leaseholders.
It seems unnecessary that that group should be forced to acquire their leases when that was not the basis on which they entered into the arrangement. There seems to be no good reason why, on the ground of doing good to individuals or to those in personal housing circumstances, we should allow company leaseholders the same benefits. I hope that my right hon. and learned Friend will look sympathetically at this narrow point even if he is unable to give us the full exemption in the new clause.

Mr. Battle: When we debated new clause 2, the Secretary of State hinted that the Government would come back, perhaps in another place, with a principal residency exclusion concession. I shall watch with interest to see what the Government do, but I hope that they will not be pressed to make exemptions. If the Secretary of State accepts the words of the right hon. Member for Selby (Mr. Alison), it will be a case of moving the leasehold market in the direction of a two-tier housing market. Clearly, a distinction will be drawn and people will see a relative fall in the value of their homes because of the two-tier leasehold market.
The hon. Member for Weston-super-Mare (Sir. J. Wiggin) at least acknowledged that there are strong

arguments against exemptions for charitable properties. I see no reason why properties that are held in trust for charities should be excluded from that part of the legislation on leasehold enfranchisement. Trustees of charities are legally bound to manage their properties on a fully commercial basis. Hon. Members should not be seduced by the word "charity" into thinking that, by opposing charities, we are therefore against the work of charities that have to look after their portfolios in that way.
There is no evidence that charities are any more benevolent in doing that than any other category of freeholder. I make that point because it is not as managers and freeholders that charities carry out charitable work; it is in their other aims and intentions. There is some evidence that they are not more benevolent, as my hon. Friend the Member for Greenwich (Mr. Raynsford) pointed out in respect of Henry Smith's Charity.
If the freehold is purely a form of investment for the charity, there is a fair argument that, if the charity is not happy with that as a sufficient return on its investment, alternatives are readily available. The right hon. Member for Selby said that freeholding was a drop in the ocean of time for the Church Commissioners. We should keep our eyes firmly on the people who live in houses over which the Church Commissioners have the freehold. It is not a drop in the ocean of time for the leaseholders. The focus should be on their lifetime and the quality of their lifetime.
The leaseholders involved have their homes at stake. Many of them have invested their savings in their homes. If they were now to be excluded from the legislation, they would see a relative fall in the value of their homes. In effect, their homes would become second-class properties. By offering exemptions, the Government would be opening the way to setting up a two-tier structure of leaseholders. I hope that that is not their intention.

Mr. Raynsford: I have been thinking about my hon. Friend's remarks and those of the right hon. Member for Selby (Mr. Alison). The logic of the case for the exemption of lettings by charities to non-residential occupants would lead inexorably in one direction. It would not be a two-tier situation, but one in which it was impossible for any individual to obtain a letting from any such freeholder, because all lettings would be given to companies in order to evade the provisions of the Bill. That would effectively entirely close off the option.

Mr. Battle: I am grateful to my hon. Friend. As usual, he has applied his logical mind to the direction in which the Bill could go. It could create space for practically everything to be redefined and therefore effectively close off the intentions of the Bill. In other words, the spirit might be retained—that is, that the Governmentwantleaseholdenfranchisement—but in practice everyone would see the possibility of opt-out. I hope that the Government are not going down that road. I urge the Minister not to accept the new clause.

Sir George Young: I am grateful to my right hon. and hon. Friends for the measured way in which they have addressed the new clauses. My hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) conceded that there was an intellectual argument against his new clause, and I hope briefly to deploy it. It is no part of the Government's case that Smith's Charities, the Church Commissioners or other charitable landlords have acted


other than honourably in the management of their estates. Indeed, we applaud the work of Smith's Charities and other charities, some of which was mentioned by my hon. Friend the Member for Weston-super-Mare.
On the specific point made by my right hon. Friend the Member for Selby (Mr. Alison) about the Church, a few moments ago we debated company leaseholders. My right hon. and learned Friend the Secretary of State explained why it would not be possible to make the exemption which my right hon. Friend has pressed on us. I hope that, when the day of judgment comes, the Church will not hold it against Ministers for the actions that they might have taken against the Church Commissioners' interests on earth, but it is the Government's intention that leasehold enfranchisement should apply to as many long leaseholders as possible and that there should be few exemptions.
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The purpose behind the amendments is to secure an exemption for charities from leasehold enfranchisement of flats and higher-value houses and also lease renewal for flats. The debate has taken a course similar to the one which took place more than 25 years ago, in 1967, when the Leasehold Reform Bill was before Parliament. Parliament decided then that charities should not be exempt landlords, and the Bill was passed without such an exemption.
Apart from resident landlords, inalienable land held by the National Trust and certain Crown properties, only charitable housing trusts that let flats in pursuit of their charitable purposes will have any form of exemption from enfranchisement and lease renewal. In such circumstances, if the charity is the immediate landlord, the tenant of the flat will cease to be a qualifying tenant. But some of the amendments would exclude all properties from both enfranchisement and lease renewal where any landlord is a charity. A block of flats with a charity as head leaseholder would be outside the scope of the Bill. Others would prevent certain leaseholders from becoming qualifying tenants, irrespective of whether the charity was their immediate landlord.
The Bill is concerned with leasehold reform. In such a reform, it is wrong to distinguish between the profession or the character of freeholders. If a leaseholder, by reason of leasehold tenure, qualifies for enfranchisement, he should qualify regardless of who his landlord is. I do not see the case for denying some leaseholders the right to enfranchise or, indeed, to extend their leases just because their landlord is a charity. There certainly is no precedent for such a sweeping exemption.
The fact that a charity applies its income for the benefit of others is not a reason for exemption and because charities will receive full market value for their interests there is no reason why they should not continue to do the excellent work that they do now. Indeed, part of my right hon. Friend's remarks related to compensation. The Bill is neutral on the assets of a charity. Nothing in the Bill need inhibit the excellent work which charities fund.
At issue is the derivation of a charity's income. Although a charity may apply or use its income in a charitable way, it by no means follows that the income was obtained in a similar fashion. Where a charity invests, whether in property, shares or similar, the chief underlying intention is to make financial gains. An appropriate

comparison might be drawn with the position of charities owning shares. When a company is taken over, individual shareholders such as charities do not have veto rights.
For tenants, it really is of little importance whether the landlord is a charity; it is all the same to them. Their landlord, although a charity, will behave towards them simply as a commercial landlord. Indeed, one charitable landlord has confirmed that the trustees are generally bound to set premiums and rents that match the market price.
A few days ago, I happened to listen to my right hon. Friend the Member for Selby answer questions on behalf of the Church Commissioners. In reply to my hon. Friend the Member for Hendon, South (Mr. Marshall), my right hon. Friend said:
The commissioners' investment policy is to seek to achieve the best total return on their assets—that is, growth of both income and capital. This reflects their primary objective, which is to provide adequate financial support for the Church's serving and retired clergy."—[Official Report, 1 February 1993; Vol. 113, c. 12.1]
That is the objective of most charities when they look at how they derive their income.
Where a charity has a property in which two thirds or more of the flats are let on long leases, we consider that the charity has disposed of a major interest in that property. When a property is let on a long lease at a low rent, the greatest interest, often substantially the whole interest, passes to the leaseholder and the landlord's predominant role then becomes a residual management one. We will shortly have a debate about the price that leaseholders will have to pay for the freehold which will reflect the full market value of that interest. Like others, charitable landlords will be fairly compensated for the loss of their interest.
The Government's firm belief is that it would be wrong to distinguish leaseholders whose landlord is a charity from other leaseholders. We do not believe that it is in the general interest so to do. The landlord's identity makes little or no difference to such leaseholders.
An exemption for charities along the lines proposed by the amendments is, in the Government's view, difficult to defend. The amendments would exclude unfairly many tenants from the benefits of the Bill to which they are greatly looking forward. If my hon. Friend the Member for Weston-super-Mare cannot be persuaded to withdraw the new clause, I hope that the House will oppose it.

Sir Jerry Wiggin: I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 5

PURCHASE PRICE (No. I)

'. For subsections (1) and (2) of section 9 of the Leasehold Reform Act 1967 there shall be substituted the following—

Purchase Price

(1) The price payable for a house and premises on a conveyance under section 8 above shall be the amount which would be payable for the house and premises pursuant to Schedule 5 to the Housing and Urban Development Act 1993 upon the assumption that the house and premises are specified premises and the valuation date for the purposes of that Schedule is the date when notice is given by the person acquiring of his desire to have the freehold.".'—[Sir Jerry Wiggin]

Brought up, and read the First time

Sir Jerry Wiggin: I beg to move, That the clause be now read a Second time.

Madam Deputy Speaker (Dame Janet Fookes): I understand that it will be convenient to discuss at the same time the following: New clause 6—Purchase price (No. 2)—

'[]. In Section 9 of the Leasehold Reform Act 1967 there shall be inserted the following—
 1(D) Notwithstanding the other provisions of this section the price payable for the house and premises shall be increased to take account of—

(i) any diminution in value of any interest of the vendor in other property resulting from the acquisition of his interest in the house and premises,
(ii) any other loss or damage which results therefrom to the extent that it is referrable to his ownership of any interest in other property, and
(iii) provided that any examination in value shall be ignored to the extent that the loss or damage to the vendor which results from the acquisition of his interest in the house and premises is reduced by the imposition of restrictive covenants and easements.".'.

New clause 7–Price payable under enfranchisement—

'-.(1) Notwithstanding any other provision of this Act, the price payable for the freehold and any other interest in property acquired under Chapter I or III of Part I of this Act (including any house and premises acquired under the Leasehold Reform Act 1967 pursuant to modification to that Act made by Part I of this Act) shall be the sum of:

(a) the difference between the value of the freehold with vacant possession and the value of the purchasers' former leasehold interest or, in the case of collective enfranchisement, the aggregate value of the new interests to be held by the participating tenants and the value of their existing leasehold interests after deducting the value of any interest to be granted to the freeholder in accordance with section 32 and Schedule 8 (which provide for leaseback to former freeholders), and
(b) any amount of compensation for loss resulting from enfranchisement payable under subsection (2).

(2) Where the landlord or, in the case of collective enfranchisement, the freeholder or the owner of any intermediate leasehold interest will suffer any loss or damage (including loss of development value in relation to the specified premises) by way of:

(a) any diminution in value of any interest in other property resulting from the acquisition of his interest in the specified premises or his interest in other property pursuant to section 1(2)(a) or (4) or section 18(4),
(b) any other loss or damage which results therefrom to the extent that it is referrable to his ownership of any interest in other property,

there shall be payable to him (and whether or not, in the case of a freeholder, the grant of a lease in accordance with section 32 and Schedule 8 has or could mitigate the loss or damage) such amount as is reasonable to compensate him for that damage.
(3) In this section:

the new interests" means the interest of each qualifying tenant in the relevant premises after enfranchisement assuming that they jointly own the freehold and taking into account their potential ability to have new leases granted to them without payment of any premium and without restriction as to length of term.'

Amendment No. 25, in clause 28, page 37, leave out lines 28 to 31.

Amendment No. 27, in schedule 5, page 175, leave out from line 15 to end of line 38 on page 181.

Amendment No. 15, in page 175, line 44, at end insert—
`( ) In addition to any sum payable by virtue of sub-paragraph (1), where, within the period expiring 5 years

after the valuation date, the nominee purchaser or any person to whom the freehold is transferred grants or agrees to grant to any person other than a participating tenant a new lease in respect of any part of the specified premises at less than market value, he shall also then be liable to pay a sum equivalent to the difference between the market value of the new lease and the price paid or to be paid for it.'.

Amendment No. 28, in page 177, line 22, after the second 'the', insert
`qualifying tenants assuming that they are all'.

Amendment No. 26, in clause 61, page 64, leave out lines 38 to 47.

Amendment No. 13, in page 64, line 44, leave out from `shall' to end of line 45 and insert
'be determined in accordance with subsection (ID) and (IE) below

(ID) Notwithstanding any other provision of this Act, the price payable for a house and premises to which this subsection applies shall be the aggregate of—

(a) the value at the relevant time of the freehold to be acquired by the purchaser less the value of his existing interest in the property,
(b) any amount of compensation for loss resulting from enfranchisement payable under subsection (IE) below.

(IE) Where the landlord will suffer any loss or damage (including any loss in value of an interest in premises which is attributable to the possibility of demolishing, reconstructing, or carrying out substantial works of house and premises) being loss or damage by way of—

(a) any diminution in value of any interest in other property resulting from the acquisition of his interest in the house and premises,
(b) any other loss or damage which results therefrom to the extent that it is referable to his ownership of any interest in other property,

there shall be payable to him such amount as is reasonable to compensate him for that damage.'.

Mr. Jopling: On a point of order, Dame Janet. It occurs to some of us that the later grouping of amendments headed by No. 14 could be taken with this group. If that is convenient to the House, it would be helpful in the interests of progress.

Madam Deputy Speaker: That is all right so far as I am concerned, but I am in the hands of the House. If all are agreed, then, we will also discuss the following amendments: No. 14, in schedule 5, page 175 line 41, leave out from first 'the' to 'marriage'.

No. 16, in page 177, leave out lines 7 to 16.

No. 19, in schedule 12, page 200, line 21, leave out from first 'the' to 'marriage'.

No. 20, in page 201, line 25, leave out sub-paragraph (1).

Sir Jerry Wiggin: At the start of the Bill's progress through the House, I drew the attention of my right hon. and learned Friend the Secretary of State to a major anomaly—the fact that the provisions in clause 28 and schedule 5 give leaseholders the right to make windfall gains at the expense of the freeholder.
I argued that, unless the provisions are amended, they will amount to the expropriation of private property. I believe that they have no place in a Conservative Government's programme. The 1992 Conservative party manifesto committed the Government to extending home ownership. It offered residential leaseholders the right to acquire. Instead, this Bill gives any investor the right forcibly to acquire the assets of another investor.
The hon. Member for Greenwich (Mr. Raynsford) read to the House a list of the tenants in a street in his constituency. I beg his pardon if I have not got it precisely right, but it was a strange list of leaseholders who will benefit as a result of the Bill. It is nothing to do with the wretched leaseholder harassed by the wicked landlord which we heard about earlier. I was rather surprised by the hon. Gentleman's remarks, considering that he spoke on that amendment and the one by which such fortunate companies and others will be precluded from gaining the advantage of enfranchisement.
Clearly, the Bill's provisions are confiscatory. They originate from the commendable concerns which have been expressed by Conservative Members and which I mentioned during debate on an earlier clause.
I know that my hon. Friend the Member for Kensington (Mr. Fishburn) has been prominent in the defence of leaseholders in London and is much admired by hon. Members on both sides of the House for his single-minded concerns for those tenants. He is aware that I shall refer to a letter which he wrote to Daniel Smith and Partners some three years ago, in which he said:
There would be no element of compulsion".
He was discussing a Bill on leasehold reform proposed by the then Lord Chancellor. With proper indignation, he wrote:
Such provision would have been confiscatory, anti-Tory,another piece of state bossiness in Britain's property laws, which is the last place it is needed.
I am distressed that those commendable and excellent views should have altered somewhat in the past year or two.

Mr. Fishburn: I am delighted that my hon. Friend reads my correspondence so carefully. Late at night when I answer letters, I shall note that I have one more keen reader. The remarks that I made at that time were to do not with leasehold reform but with commonhold reform. When the commonhold Bill is introduced, as it will be by the Government next year, there will be no element of compulsion in it.

Sir Jerry Wiggin: It would have been much better if the supporters of the Bill had waited for the promised legislation, which, I am glad to hear, my hon. Friend the Member for Kensington will steer through the House, presumably with the co-operation of the Government of the day.
One of my complaints about the Bill is the major change effectively in eliminating leaseholds. My right hon. Friend the Minister of State said that the object of the Bill was to eliminate long leaseholds, although there appears to be a slight difference of opinion in the Government as to precisely how long and how definitive such an objective might be.
I diverge from the purpose of new clause 5, which deals with the amount of compensation to be paid after the Government have forced the freeholder to sell his rights to the leaseholder. Investors have the right, first, to buy properties which are not their homes; secondly, to force freeholders to sell properties at a discount; thirdly, to exercise the right of expropriation at any time in the future. That will enable investors to make windfall gains from a resale of an asset which has been forcibly confiscated.
On 12 November 1992, my hon. Friend the Minister of State conceded in Committee:
the tenants will have forced the sale and determined its timing".—[Official Report, Standing Committee B, 12 November 1992; c. 73]
On 19 November 1992, he said that the leaseholder
will receive an asset worth more than the price paid.
Surely that admits our contention. As the Bill gives those persons the right to expropriate property at a time of their choosing, my hon. Friend's proposals for compensation are, by definition, inadequate. After all, the forced sale of the freehold is being upheld by the law. Therefore, there can be no willing seller, even though there may be willing, even eager, buyers. I am not surprised that that should be the case, given the profit which will accrue to them.
In Committee, the Government argued that clause 28 and schedule 5 provide a valuation based on the normal market practice. The forced sale of assets, upheld by the law, is not in anybody's fair mind normal market practice. However, it is current practice for leaseholders and freeholders, in negotiation, to take into account the potential gains to be made by the leaseholder. The gains that could be made will vary with the length of the lease. I have heard figures quoted as high as £275,000 on a property in Mayfair with a lease of, say, 30 years unexpired, and a freehold vacant possession value of £1·5 million.
My hon. Friend the Minister told the House that his Department had tried to ask
what would happen if the freeholder wanted to sell and the leaseholders wanted to buy. What price would they agree on voluntarily?"—[Official Report, Standing Committee B,19 November 1992; c. 188.]
That is all very well, but it does not reflect the reality of the Bill, which is that the freeholder will be forced to sell.
My hon. Friend said that, in drafting the clauses and schedules, the Government tried to build into the statute a formula which would reflect what happens in a transaction between a willing buyer and a willing seller. At the same time, the thrust of this legislation is to force, and then uphold in law, a transaction between an unwilling seller and a very willing buyer. The anomaly at the heart of the Bill is that the Government are forcing a sale. My new clause and amendments seek to correct that anomaly and to provide for as fair compensation as is possible in the artificial property market created by the Bill.
I tabled the amendments not simply in defence of the interests of freeholders but in a broader defence of the property market. To quote my hon. Friend the Member for Kensington, this piece of state bossiness is already disrupting the property world and deterring investors from a market unique in the western world for its lack of flexibility in housing tenure.
At the beginning of the century, rented property made up for 90 per cent. of the property market. Today we differ from the United States and all other European countries in having a property market in which only 7 per cent. of all properties are to rent.
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The flight of investors from the rented sector was brought about by state interference. The Bill is already deterring investors. Only fair and adequate compensation will encourage them to maintain their interest in housing investment.
I appreciate that the terms of the amendments are complicated and technical, but the concept behind them is


simple: to ensure that the compensation is based on the difference between the value of the lessee's interest before he or she acquires the freehold, and the value after. In other words, my amendments will provide for the lessee to pay as compensation for the forced sale the full increase in the value of the property arising from enfranchisement. When a landlord grants a long lease on any property, he effectively gives up some of that value in return for retaining the freehold—a fact which everyone has always recognised in the history of leasehold, yet Which is being blindly ignored on the specious argument that there is no choice.
The Government propose a formula which will not provide for the landlord to get back all that value. It provides for the increase in value arising from the combination of freehold and leasehold known as the marriage value, to be shared between the lessor and the lessee, with not less than 50 per cent. going to the freeholder. That has been interpreted in some quarters as meaning that a 50:50 split should be the norm, but as my right hon. Friend said, the leaseholder would receive an asset worth more than the price paid.
At the same time, the Bill is effectively giving the right to enfranchise to those with very high-value houses excluded by the 1967 Act, and again there will be some fairly substantial windfall gains to lessees.
It appears that the new model Labour party, far from squeezing the rich, is now happy to approve the parts of the Bill that make some of the rich richer still. Conservative Members see no reason why leaseholders should benefit at the expense of freeholders, particularly as a very large number of charities and so on are involved, and we have already debated the merits of those cases. These gains are particularly unacceptable under the conditions of a forced sale.
I know that the Royal Institute of Chartered Surveyors will be dragged into the debate. I understand that it recently wrote to the Department clarifying its position. Mr. Michael Chambers of the RICS makes it clear that it would be wrong for legislation to begin from a premise
that a 50:50 split will be the norm".
The leasehold valuation tribunals will be resolving any disputes about the allocation of marriage value, and it is the view of the RICS that there will be cases in which all, or virtually all, the marriage values should go to the freeholders, as currently happens in market practice. They should, but will they? That is the question.
I move the amendment in the spirit of accepting the Government's underlying principles of increasing home ownership, but I believe that the compensation clause is a major anomaly in the Bill, to which I object more than I do to the general principle.

Mr. Kenneth Baker: Our debate on the valuation of leasehold property under enfranchisement is one of the most important this evening. To say that the law relating to such valuation is complicated is a meiosis. I am sure that my right hon. and hon. Friends on the Front Bench know what a meiosis is—it is not something to which the Government are given; it is a wild understatement. We are dealing with an immensely complicated and arcane subject.
When one attempts to understand the complexity of the legislation on valuation it reminds me of the famous comment that Palmerston made about the Schleswig-Holstein question in the middle of the last century when he

said that only three people understood it: one was a German who had been committed to a lunatic asylum, the second was a Danish professor who was dead and the third was himself and he had forgotten about it. I shall try to do a little better and attempt to explain to the House why I have certain reservations about the Bill.
I am not concerned about the principle of the Bill, which is that there should be an extension of leasehold enfranchisement, although I appreciate that some of my right hon. and hon. Friends strongly oppose that principle, but when the Government undertake to introduce a measure that is a means of setting aside agreements that have been freely entered into according to the laws prevailing at the time, and retrospectively set them aside, it is up to the House to ensure that the victims of that action are properly compensated.
I have in mind a particular case involving one of my Constituents whose estate has been in the family for some 400 years. One of the houses was let on a lease some years ago, and he had hoped to return it to the use of the family when the lease expired, but, of course, that will not now be possible. I can understand his considerable annoyance at the proposals in the Bill. Such annoyance can be met by proper compensation.
I shall now deal with houses and the three types of valuation that relate to them. First, there are the houses affected by the 1967 Act which I shall call the 1967 houses; then there are the 1974 houses, which are those affected by the 1974 Act, and then there are the 1993 houses, which come under the Bill.
The basis of valuation for the 1967 houses under the original 1967 Act was that the right to enfranchise was given to those with a rateable value of below £200 in the country and £400 in the town and the basis of valuation of those properties for lessees who wished to enfranchise was described as an investment value, which did not bring in the concept of the marriage value. That was a very good deal for the leaseholder and many people will know of examples in which property was bought for a very small sum and sold on for a substantial profit shortly afterwards.
The 1974 valuation introduced a new concept. First, it extended the ratable value to £750 in the country and £1,500 in the town and the valuation tribunal was allowed to take into account the tenant's bid for the freehold value; therefore, the tenant was given an opportunity to marry his investment in the tenancy with the freehold, and the landlord was allowed a share in that. That was the introduction of the concept of the marriage value.
The houses that will be enfranchised under the Bill will be valued on the same basis as provided in the 1974 Act. So we shall have two bases of valuation for houses on franchise under the present system when the Bill becomes law—the 1967 valuation and the 1974 or 1993 valuation.
The treatment of flats is yet another concept of valuation. Of course, flats are brought within enfranchisement provisions for the first time under the Bill. Schedule 5 lays down the basis of valuation for flats. As those who have been following the Bill closely will know, schedule 5 has three elements. First, there is the investment value, which, in shorthand, approximates to the 1967 type of valuation. Secondly, there is the freeholder's share of the market value, which is part of the 1974 legislation. Thirdly, there is an allowance for injurious affection. That is an allowance for the fact that the value of the remaining


property surrounding or next to the property that has been enfranchised may be reduced as a result of the enfranchisement.
The best way to understand the schedule is by giving an example. If the market value of the property was, say, £100,000, the investment value, for the sake of argument, may be £10,000. The freeholder share will be, let us say, £70,000—therefore, amounting to £80,000. The difference between £80,000 and the market value of £100,000 is known as the marriage value. As the Bill says, at least 50 per cent. of that should go to the freeholder.
I have tried to explain to the House that there is an inconsistency between the processes of valuation for houses and flats. The valuation for flats is as I have just described. The valuation for houses starts with the 1967 houses with very low valuation. Some of the amendments seek to include the 1967 valuation in what I shall propose in a moment. I would not seek to do that. Some would say that after 25 years people have had a chance to enfranchise their properties, and, if they have not, they should come on to the new basis. My right hon. and learned Friend the Secretary of State will be pleased to know that I am not arguing that tonight. I am arguing that the basis of valuation for houses and for flats should be the same. That is the purpose of new clause 6.
New clause 6 creates only one basis of valuation for flats and houses. It seeks, first, to incorporate the concept of injurious affection into the valuation of houses. I hope that my right hon. and learned Friend will find that acceptable. I do not see what arguments he can use to say that one can apply the principle to flats and not to houses.
I also hope that my right hon. and learned Friend will be able to accept the principle that flats and houses—by houses I mean the 1974 as well as the 1993houses—should be valued on the same basis as flats. Again, that is part of the principle of new clause 6.
Like my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin), I wish to refer to the letter from the Royal Institute of Chartered Surveyors. When some of us have argued that when enfranchisement takes place the freeholder should be entitled to the market value—which would be, in effect, 100 per cent. of the marriage value —we have been told two things. First, we were told that the RICS was not arguing the point. Secondly, we were told that the basis that hitherto the Government had tried to defend was the basis for valuation for compulsory purchase. I do not find either argument convincing. I particularly do not find the latter argument convincing.
As my hon. Friend the Member for Weston-super-Mare said, the RICS has now written clearly about the matter. I noticed that my right hon. and learned Friend the Secretary of State was nodding when my hon. Friend read out what the RICS said. Perhaps I could encourage my right hon. and learned Friend to nod further. It said:
Under the Bill, any disputes about the allocation of the marriage value will be resolved by the Leasehold Valuation Tribunals.
I hope that my right hon. and learned Friend will nod. He nodded earlier. It continued:
It will be essential that in reaching their decisions they draw on evidence on what is the current practice in the market rather than begin from a premise that a 50–50 split would be the norm.
Another nod.

The clearer that this could be spelt out in the Bill, the better.
Ah, another nod. That encourages me. It means that we have a listening Government, or at least I hope that we have. [HON. MEMBERS: "A nodding Government.") That is as good.

Mr. Jopling: They were nodding off when they drafted the Bill.

Mr. Baker: No, that is unfair. I am not against a nodding Government so long as they nod to proposals from Conservative Back Benchers and not proposals from the Labour Front Bench.
My right hon. and learned Friend the Secretary of State is nodding again. I hope that what I have said has shown the House that changes are needed. There is genuine anxiety among many people that if contracts freely entered into under the existing legislation are to be set aside retrospectively, the compensation should be the proper market value. I do not seek more than the market value. Some amendments propose that compensation should be the marriage value plus injurious affection.
However, it is reasonable for my right hon. and learned Friend to accept the arguments that when the valuation clauses are amended—I suspect that they will be amended not tonight but in another place—two principles should apply: first, flats and houses should be valued on the same system; secondly, there should be an allowance for injurious affection for houses.

Mr. Raynsford: We have heard some nonsense this evening, especially in this debate. The suggestion that extensive expropriation of unfortunate freeholders is about to take place is one of the most nonsensical arguments advanced by those people who seek to tighten the Bill to make it entirely ineffective.
Let us think about the circumstances in which most freeholders, and especially some of the large estates, operate. They have owned the land for several centuries. During that period they have been able to extract from leaseholders repeatedly virtually the entire value of the site that has been subject to the lease.
As leases have expired and been renewed, the freeholder has derived a huge premium for extending the lease. During that period the leaseholder has been liable for the maintenance and upkeep of the property and has had to keep it in decent condition, thereby contributing to the increased value.
When Conservative Members suggest that a measure to allow leaseholders to acquire at market value the freehold of the property is expropriation of the freeholder, Opposition Members are astonished at the gullibility of the dukes' men on the Conservative Benches, who have been persuaded by powerful interests to go along with that specious nonsense. Freeholders have lived off the fat of the land for long enough and it is time that the archaic system of leasehold tenure, which is dead everywhere in the world except Britain and one or two other countries, was swept away.

Mr. Alan Duncan (Rutland and Melton): How can the hon. Gentleman say that the freehold will be bought at market value when it is widely admitted that the measure puts an immediate capital gain into the hands of the leaseholder?

Mr. Raynsford: I am grateful to the hon. Gentleman for that intervention, because it allows me to explain what is involved in the valuation procedure, which seems to me unduly generous to the freeholder, As the hon. Gentleman will know from studying schedule 5, three elements are involved. The first is the value of the freeholder's interest, which will be paid to the freeholder. I accept that. But the second is the freeholder's share of the marriage value. The marriage value is the enhanced value of the property as a result of bringing together the freehold and the leasehold. That is a windfall gain, if there is any. It is a windfall gain which is owed neither to the freeholder or the leaseholder because it arises purely—

Mr. Roger Evans: Will the hon. Gentleman give way?

Mr. Raynsford: I hope that the hon. Gentleman will bear with me a moment. I am trying to answer the point made by his colleague. I know that he is impatient, but I should like to complete my response.

Mr. David Evans: Get on with it.

Mr. Raynsford: I am responding to an intervention from one of the hon. Gentleman's colleagues. He might have the decency to wait until—

Madam Deputy Speaker: Order. Some of the sedentary remarks are less than charitable.

Mr. Raynsford: Like the lettings policy of some charities.
The windfall gain, in so far as there is one, is, according to the provisions of the Bill, to be shared equally between the leaseholder and the freeholder. That seems to me to be possibly the fairest way of deciding it, but by no stretch of the imagination can this be described as a windfall gain for the leaseholder, because the freeholder is going to get an equal proportion.
Then there is the third element, of injurious affection, to which the right hon. Member for Mole Valley (Mr. Baker) referred. I have to say to him that a completely different circumstance applies to houses from that which applies to flats. It is absurd to suggest that it applies to houses. The freeholder of a flat will be entitled to compensation for any loss he may be able to claim that he has suffered as a result of this process.
So, from the Labour side, the terms look extraordinarily generous to freeholders, many of whom will have received, over many years previously, the full, if not more than the full, capital value of the property on which they are now to get an additional bonus. It seems to me to be unduly generous, if anything, to the freehold interest, and the suggestion that it is expropriation is utter nonsense. I hope that the Government will resist these entirely unjustified and specious arguments.

Mr. Roger Evans: It is always refreshing to have a particularly poignant example of old-fashioned primitive socialist prejudice. The hon. Member for Greenwich has just indulged in one of the more shameless exercises of socialist primitivism. Whether a piece of land was bought 250 years ago or five years ago, in the case of compulsory purchase for public purposes it would be treated, rightly under the rule of law, which some Labour Members appear to regard as evident frivolity, as equal. If one takes

a person's property for a public purpose it is irrelevant whether one is a duke or whether the property was acquired yesterday or several hundred years ago.
The issue of public compulsory purchase has always been guarded by the House with the utmost jealousy, and properly, because it is fundamental to the rule of law. This group of amendments goes to the fundamental issue of political morality. The principles of public compulsory purchase, traditionally, whether going back to building canals in the 18th century or dealing with modern local authorities exercising general statutory powers, are as follows: that there is a specific proven public purpose for the aquisition; that no more is taken than is necessary for that purpose; and that full compensation is given. That is what the rule of law is all about. It is fundamental in this country. It has only been in time of war, with requisitioning and matters like Crichel Down, that that fundamental constitutional principle has been removed.
In the present Bill, the Government are in effect setting up by statute a scheme of private compulsory purchase of real interests. There was one previous example of this on the statute book—the 1967 Act—but the fundamental difference between that legislation and this is that, under the 1967 Act, the class of persons benefiting was carefully defined in such a way that a social purpose could be said to be served by the legislation.
If the present Bill creates a situation in which charities may be expropriated by foreign companies, simply by the accident of the general scheme, it is even more important that the compensation provisions for this scheme of private compulsory purchase should be at least as generous as for ordinary compulsory purchase for public purposes. The two cannot, as a matter of general principle, be considered separately or treated in any way differently.
I appreciate that the intellectual Jacobinism of my hon. Friend the Minister of State is fundamental to the principle that there must be leasehold enfranchisement, but if one goes down that path without full compensation, why should one stop where the Government have stopped now? I know that Labour Members will ask why, if leasehold tenure is obsolete, ordinary Rent Act tenants should not be given rights to acquire compulsorily against freeholders. I can see the argument, but fundamental to that proposal is that any adjustment to property rights must be done with full compensation and for a public purpose.
I conclude with this commendation to my right hon. Friends. They will recall that the 1967 Act was challenged years later in the European Court of Human Rights on the grounds that it was a breach of article 1 of the first protocol. There may be those in the House who believe that the European convention on human rights should be part of our law or should take precedence over the will of Parliament. I am not in that category. What I am anxious to do is to prevent my right hon. and hon. Friends from any subsequent embarrassment.
The justification for the European Court's decision was that the public purpose which justified the 1967 Act was the peculiar class of beneficiary. There was a social purpose. Where there is no social purpose of a specific nature, but simply an arbitrary rearranging of property interests, it must follow that full market compensation should be given for compulsory purchase. On that basis I commend this group of amendments.

Mr. Nicholls: This group of amendments gives an opportunity to my hon. Friends to resolve the dilemma to which I referred earlier: how on earth a Conservative Government can expropriate property belonging to somebody else. It does not matter for the purposes of the dilemma whether they are paid the full market amount or not. It will be no defence for Dick Turpin to say, when tried at the assize, "I offered them full market value for their jewellery before I took it and they declined it." In the old classic definition, it would still be theft.
The problem that my right hon. and hon. Friends have to resolve is that there is a conflicting balance of Conservative interests. They conflict because we are in the business of taking away the property of people when they do not want to part with it. It does not much matter for those purposes whether one is a duke or a dustman, or even, dare I say it, a Minister. There is a dilemma and it has to be resolved. Fortunately, there is a way to resolve the dilemma, and that is by making sure that a proper rate of compensation is paid.
I do not particularly concern myself that these amendments are complex. I accept that they are and, as a lawyer, I look forward to that with great relish. The point is that even behind those difficult amendments lies a straightforward purpose: to make sure that a proper level of compensation is paid. The sad thing is that presumably the principle is agreed between the people who signed this amendment and Ministers. That has been clearly understood because, at the outset, the Government said that they were not in the business of allowing people to acquire property at a discount.
As long ago as 6 March 1992, the then Under-Secretary for the Environment, my hon. Friend the Member for Suffolk, South (Mr. Yeo), said:
We do not intend that through this legislation leaseholders should be able to acquire assets at a discount"—[Official Report, 6 March 1992; Vol. 205, c. 583.]
That was a considered and measured statement. I have not listened to the tapes to see whether that was a throwaway remark by the Minister at the time, but I doubt whether it was. I have a distant memory that it was a familiar house style, and a well-considered statement of Government intention at the time, that property should not be acquired at a discount.
Indeed, my right hon. and learned Friend the Secretary of State, when he opened the Second Reading debate, said:
I contend that the Bill provides for proper compensation".
So it was admitted and acknowledged that proper compensation would have to be given. My right hon. and learned Friend went on:
As for compensation, the leaseholders will pay a fair market price for their landlords' interest."—[Official Report, 3 November 1992; Vol. 213, c. 154.]
I heard it advanced in support of the way in which the Bill provides for compensation that it is a fair market price. It may aim to be so, but it is complete nonsense to talk about a fair market price in the context of a forced sale. A market price is a price agreed by two people when one wants to buy and the other wants to sell. In an imperfect world, there will sometimes be a disparity in the bargaining position, but forcing one person to sell must introduce the ultimate disparity. In such circumstances, it is impossible to talk about the market; all that can be discussed is a fair price.

Ms. Glenda Jackson: The Government introduced the Bill because the basic premise to which the hon. Gentleman refers—relating to fairness and rights—did not exist. That was the basis for the Bill. It was needed only because landlords refused to issue any kind of lease other than a leasehold.

Mr. Nicholls: Not only do I not understand that point; I am not sure that the hon. Lady understands it either. The reason for the legislation is straightforward and was set out in the Conservative party manifesto. It was all about giving a right to residential home owners. The amendments that we are discussing concern the compensation that should be paid.
It has been said before—no doubt it will be said again in the wind-up speech—that what is being suggested is at least fair, although it is not a market price because no such price can operate in this context. I have even heard it said —although I cannot believe that I shall hear it said today —that it is not a windfall profit, because it arises from market forces. It does not; it arises specifically from the Bill. I have also heard it said that it is not a discount. The fact is that property acquired from an unwilling seller is instantly worth more than the buyer has paid. That is a discount, whatever people may prefer to call it. The amendments aim to ensure that there is no discount and that the level of compensation relates to the value of the property at the time of its acquisition by the new owner.
I am grateful to my hon. Friend the Minister of State for the time and courtesy that he has expended in talking and writing to me on this subject. I hope that he will not consider it a breach of confidence if I cite one of the arguments that he has advanced to me over the months. He has said, effectively, "See my problem: I am pulled in both directions." Indeed he is, as I would expect him to be.
The debate has shown very clearly that our reasons for embarking on this legislative road are not the reasons espoused by the revisionists manques on the Opposition Benches. We are in the business of doing something for residential home owners. For instance, the hon. Member for Greenwich (Mr. Raynsford), who produced the most articulate but also the most bizarre exposition of Opposition thinking, is not in the business of helping residential home owners; he is in the business of attacking and divesting dukes.
My hon. Friend the Member for Monmouth (Mr. Evans) spoke of a possible extension of the legislation. The true socialists on the Opposition Benches were nodding away: they know where the legislation could lead. There is no question of our being able to resolve the legislation on the basis of being pulled in two directions; there is always a ready market for the acquisition of property at less than the full market value. Any self-respecting fence knows that.
If we are to try to resolve the dilemma and to work out how we can adhere to our Conservative principles without breaching one of the most important of all, there is no point in our taking any aid or comfort from the arguments of Opposition Members. We may need their votes tonight; that is one of the occasional embarrassments of being in government. But, in trying to resolve the dilemma, the Government should look behind them and ask what their


Conservative supporters want. They should not abandon the legislation; they should ask what was their original policy objective.
The objective was to help residential home owners, not to enable people to acquire property at a discount. That presents a fundamental problem which accepting the amendments—or, at least, the principle behind them—would help the Government to resolve.

Dame Jill Knight: I strongly agree with what was said by my hon. Friends the Members for Monmouth (Mr. Evans) and for Teignbridge (Mr. Nicholls). I urge the Government to accept that the Bill is occasioning a great deal of anger, distress and worry among Conservative Members.
I have always detested compulsory purchase, which is opposed to all the principles in which I believe. I recognise that, in some circumstances, it may be necessary for the public good; 1 also accept that, on occasion, tenants in leasehold properties have suffered—for instance, when the owners and managers of blocks of flats have imposed unfair service charges. That applies to many of my constituents. What I cannot stomach, however, is the House of Commons forcing a private person to proceed with a sale to another private person, although the seller does not wish to negotiate that sale. I ask my right hon. and learned Friend the Secretary of State to make clear the Government's intentions to those of us who have grave worries.
My right hon. and learned Friend has outlined a lengthy catalogue of reforms. I am worried about what was said by my hon. Friend the Member for Monmouth. I cannot see any reason why, if all the arguments adduced today are accepted, we should not move on to allow private tenants to buy their houses or flats from unwilling landlords. Although I think it entirely right for council tenants to have such rights—so does the Labour party now; Labour Members had better listen to this—I feel that, unless we recognise the real need for a privately rented housing sector, we shall be in deep trouble. Unless we understand that we must play fair with owners—whether they own leases orproperties—I can see myself voting against the Government.

Sir Peter Hordern: I will not detain the House for long. I had not intended to speak on this group of amendments and my right hon. and learned Friend the Secretary of State will know what I am going to say, because I have already told him.
As my right hon. and learned Friend knows, I am not happy about the Bill. In particular, I am unhappy about the provision of insufficient compensation. I was struck by my hon. Friends' speeches about that and I think that my right hon. and learned Friend will have to advance careful arguments if he is to counter what they have said.
When I first came to the House, my party was in opposition. We opposed a measure presented by the then Government concerning compensation for the assets of the Burmah oil company. We opposed it partly on grounds of retrospection, but principally because the compensation was inadequate. On both those grounds, the amendments need to be considered carefully.
The point that I wish to make to my right hon. and learned Friend—indeed, I have already put it to him—was more or less resolved in a letter that he wrote to me about one of my constituents, who happens to own a house that

has been in his family for some time and which he lets, on lease, to the Foreign and Commonwealth Office. I believe that it is quite well known to some of my right hon. and hon. Friends. In theory at least, the Government are now in a position to buy the house, which the family has owned for some 250 years, at a discount.
If the compensation were adequate, there would be no major concern about the matter, although my constituent is anxious not to sell the house. The point that concerned me—I think that it also concerned my right hon. and learned Friend—was that, had it not been for a technicality, the Bill would have allowed the Government to buy the house at a discount from the market price. That would have been nationalisation at a discount.
It is some time since a Minister resigned over such matters. Years ago, Ministers used to resign on issues such as Crichel Down. I have made the point not for the merit of the case. The Minister has persuaded me that the lease on that house was one year too short for the Foreign and Commonwealth Office to have exercised its right to buy the freehold. So my constituent's problems do not arise on the group of amendments before the House. But imagine had it been one year longer: the Government could have nationalised one of my constituent's properties. While that may not be the case, it does not say much for the nature of the Bill in that it would have represented compensation at well below the market price. I hope that the Minister appreciates the depth of feeling that exists on the Government Benches about compensation at less than market value.

Mr. Howard: The amendments and the new clauses relate to compensation, although the debate has ranged more widely than that. I hope that my hon. Friends who were not here for the debate on the earlier group of amendments will forgive me if I do not go over the ground that I have traversed then, when I explained how this reform fitted into a long tradition of Conservative Governments reforming land tenure.
I shall answer at the outset my right hon. Friend the Member for Horsham (Sir P. Hordern) who, uncharacteristically, was a little unfair in suggesting that the constituency case to which he referred came outside the scope of this legislation as the result of a technicality. It was not simply the fact that the term of the lease was shorter than that which would have brought it within the Bill. Indeed, it is a different kind of lease from that to which this legislation applies. It was not a residential lease, so there are a number of fundamental reasons—I appreciate the concern that my right hon. Friend would have had if it had come within the terms of the Bill—why the description "technicality" should not be applied to that case and why the case does not come within the scope of this legislation.
My right hon. Friend the Member for Mole Valley (Mr. Baker) introduced me to the concept of meiosis. I confess that the concept was previously unknown to me. He was kind enough to define it as "wild understatement" and said that it was not a concept to which the Government were given. It is a condition to which my right hon. Friend is something of a stranger, but I was grateful for his contribution and I hope that my remarks will be of some comfort to him and a positive response to his comments.
I was grateful for the solicitude of my hon. Friend the Member for Monmouth (Mr. Evans), who sought to prevent me from appearing before the European Court of


Human Rights at a future date. Should that happen, I hope that my hon. Friend will make his services available to me. He ended with a plea that the basis for compensation under the Bill should be the same as that provided under compulsory purchase. The answer is that it is, though I appreciate that that does not satisfy others of my hon. Friends, and I hope to ally at least some of the anxieties as I respond to the observations of my right hon. Friend the Member for Mole Valley.
The amendments seek to increase the price paid, whether by lessees of houses who are already entitled to buy their freeholds by the 1967 Act or the 1974 Act extension, or long lessees of houses and flats, who will gain the right of enfranchisement for the first time under the Bill.
6.45 pm
The House must address difficult and important issues about valuation, and it may be helpful if I describe the evolution of the proposals in the Bill. When long leaseholders of low-value houses who were paying a low rent became entitled to enfranchisement under the 1967 Act passed by the Labour Government, the price was very low. As my right hon. Friend the Member for Mole Valley pointed out, they had to pay only the open market value of the freeholder's interest in the land, which would have been less than the price for which it could have been sold to a third party.
Labour's policy intention, which the then Conservative Opposition always opposed, was confirmed by the Housing Act 1969, which added a statutory assumption to the valuation provisions in the 1967 Act to the effect that the tenant was not buying or seeking to buy, and that reversed a judicial decision which had the opposite effect by assuming that the tenant was in the market.
Understandably, that was popular with tenants. But we did not accept that it represented an arrangement that was fair to both parties to the transaction. We opposed the 1967 measure on Second Reading, as it was unfair to the landlord. During the passage of the Housing Act 1974, under a later Labour Government, the Conservative Opposition successfully moved an amendment to the 1967 Act to bring medium-value houses within its scope. That amendment was moved on the basis that the price had to take into account the fact that the tenant had a special interest in buying, so that his bid for the freehold was likely to be higher than that of a third party.
That basis of valuation has proved much more acceptable and has worked well in practice for nearly 20 years. It is the basis which we now have for the enfranchisement of medium-value houses. It is a valuation basis which the tribunals dealing with such matters have become well accustomed to interpreting, and it reflects what actually happens in the market. It does not provide statutory favouritism.
When we considered the extension of enfranchisement rights to the relatively few leaseholders of ineligible houses under the earlier legislation, and the 750,000 or so long leaseholders of flats, there was no doubt that they should have to pay no more and no less than the market value of their landlords' interests. The existing legislation delivers that objective. For flats, we have spelt out the way in which

marriage value should be calculated and divided. It is not a change in policy. It enables the parties to understand more fully the basis on which the valuation is derived.
We have provided that the price paid to the landlord should comprise the sum of three elements identified by valuers. Those are the open market value of the landlord's interest, at least half the marriage value and compensation for any severance losses. The first two elements add up to the price paid by tenants of medium-value houses—we are just specifying them separately—and naturally, as under the 1974 amendment, tenants must also pay all reasonable landlords' costs.
The first element, open market value, represents the price that the landlord could receive from a third party purchasing the property as an investment. It is fairer than the original valuation basis applied to low-value houses by the 1967 Act because it takes into account the value of the buildings as well as of the land.
Most of the amendments with which we are concerned affect the other two elements. Marriage value is the difference between the aggregate of the values of the freehold and leasehold interests before and after enfranchisement. In other words, it represents the increase in value when the freehold and the leasehold come under the same control. It is how the market puts a monetary value on the tenant's special interest in acquiring the property and it reflects the fact that the former tenant of the house gains an unencumbered freehold, and the factthat the tenants collectively in a block of flats can grant themselves new leases for little or no premium.
It is important that hon. Members appreciate that we have not newly identified marriage value for flats. It is a familiar idea. It exists for houses too, and, as I have explained, the present provisions reflect it. Although marriage value is not mentioned in section 9 of the 1967 Act, the valuation base in section 9(1A), which applies to medium-value houses, takes into account the tenants' interest in obtaining the property. It is because of this special interest that an element of marriage value forms part of the price.
In the marketplace this marriage value is shared to ensure that a mutually acceptable bargain is struck. The market thus acknowledges the mutual financial benefit of selling to leaseholders. Landlords could not obtain all the marriage value save in very exceptional circumstances. The Lands Tribunal, following this principle, has adopted the approach of sharing marriage value between the parties.
Several right hon. and hon. Members have referred to the Royal Institution of Chartered Surveyors, but I do not think that they were necessarily aware that it has today issued a press notice which takes its views somewhat further and makes them somewhat clearer. I will not weary the House by reading it all, but perhaps I may read part of it. The RICS spokesman says:
A great deal of confusion continues to surround the concept of 'marriage value'—the additional value which is created when the leasehold and freehold interests are brought together. There have been claims"—we have heard them today—
that the way in which this value is shared between leaseholders and freeholders will lead to massive windfall profits for some leaseholders.
The RICS believes that many of the concerns stem from a misreading of the Bill.
The document goes on to explain its understanding of the Bill and how the windfall will not arise. It also explains —to answer the point raised by my hon. Friend the


Member for Weston-super-Mare (Sir J. Wiggin)—that in some cases, because the market would give the whole marriage value to the freeholder, any decision by the leasehold valuation tribunal would also give the whole value to the freeholder. It is not a question of splitting the valuation 50:50 and treating that as the norm. I believe that that was the reassurance sought by my hon. Friend. It is a question of seeking to treat the marriage value in a way that most nearly reflects what the market itself would provide.

Sir Nicholas Fairbairn: rose—

Mr. Deputy Speaker (Mr. Michael Morris): Order. Before the hon. and learned Gentleman intervenes, may I point out that it would be enormously helpful if the Secretary of State would speak to the microphone, so that Hansard Reporters can catch every word he says?

Sir Nicholas Fairbairn: Would my right hon. and learned Friend, who is a most sophisticated English silk, explain to a simple Scottish one why the English find it so difficult to do anything simply? In Scotland we either rent a house or buy a house. If we rent it, it belongs to the person who rents it; if we buy it, it belongs to us. We do not have freehold, leasehold or any of this nonsense. Instead of this ridiculous formula to do with marriage value—I have never heard of the marriage value of a house: I have never heard of houses marrying—why not just rent houses and give them back when they cease to be rented, or own them and sell them when they are no longer wanted?

Mr. Howard: My hon. and learned Friend is entirely right to suggest that, if we had followed Scottish practice, we would not have had leasehold and would not be here this afternoon debating this legislation. I am not sure whether my hon. and learned Friend is taking the radical course and suggesting that the legislation does not go nearly far enough and that we should abolish leasehold completelyinEngland—

Sir Nicholas Fairbairn: indicated assent.

Mr. Howard: I see that he is. I am afraid that the Government are not bold enough to follow his advice on this occasion. I suspect that by rejecting that advice I am on the same side—at least in this respect—as my right hon. and hon. Friends who have put their names to this group of amendments.
We have followed the precedent of the 1974 amendment to the 1967 Act and the professional advice that we have received from the RICS and elsewhere in formulating our policy that marriage value released by the enfranchisement, of flats should be shared. I do not consider it right that tenants should pay more than the open market price to enfranchise, but that would be the effect of the new clause and amendments, which would require that all the marriage values be awarded to the landlord. To give the whole marriage value to one party to the transaction would not be equitable. If the landlord were to sell to any other purchaser, the extra value would not be released.
Enfranchisement is effectively maximising the possible gain a landlord can get from his asset. This is because he receives all his marriage value share when the property is enfranchised. If there were no enfranchisement, he would receive it, if at all, spread over a number of years as and when individual tenants wished to extend or renew their

leases. All the landlord loses is control over the timing of the disposal, but, as this maximum gain only comes from a sale to the tenants, they in practice dictate the timing in a voluntary transaction, too.
The Bill provides that landlords of flats shall receive at least half of the marriage value. This is a floor, and where the market would have given the landlord a bigger share in a voluntary sale, he can argue for and get more under enfranchisement.
I understand the concern that the landlord will receive marriage value only on the flats of participating tenants. Amendments Nos. 15 and 28 seek to give the landlord extra money by including the element in respect of the non-participating qualifying tenants as well. But it would be very unfair to give the landlord marriage value on the flats of non-participating tenants, because no marriage value is in fact released. It would be false accounting, as the leases of these flats are not being brought under the same control as the freehold. Marriage value arises only when the freehold and leasehold interests are joined under the same control.
My right hon. Friend the Member for Mole Valley raised an important point about the provision of compensation for severance—part of what is known as injurious affection for houses. The Bill already provides it for flats. My right hon. Friend says that it should be provided for houses, too. He correctly takes the view that that would be of some assistance in the constituency case to which he referred. It is important that the House appreciates that "injurious affection" is a precise valuation term to quantify in money terms the loss of redevelopment potential or any other loss of value on land now in the landlord's ownership which he keeps after the enfranchisement of other property. It is not a general compensation to cover compulsory purchase by tenants. It has only that limited meaning.
It is a valid element in the price of blocks of flats, because a development or an estate will often contain a group of blocks. Here the loss of one may prevent the freeholder developing the land between the blocks. It might also make his costs in maintaining the remaining blocks higher due to the loss of economies of scale. That is why the Bill includes special provision for those circumstances. It is more difficult to visualise the need for severance for houses, and it was not provided for under the 1967 Act where the low-value houses which were to be enfranchised were very unlikely to have an impact on the remaining property of the landlord.
I do understand the concerns about high-value houses brought in by that Act. I accept that in these cases there may be a need for severance to be recouped. I therefore propose to introduce an amendment in another place to ensure that all houses brought into the 1967 Act by the Bill should have a new head of compensation to cover severance, in line with the provisions for flats in the Bill.
I cannot accept new clause 6 because it would apply to all houses. I am particularly concerned about the impact on low-value houses, which are already capable of enfranchisement. The addition of severance to the price could add considerably to the cost of enfranchising such property, or could be used by a landlord to deter enfranchisement, which would be unfair. I think that my right hon. Friend the Member for Mole Valley recognised that in his observations.
There has been a full debate on property valuation and I have listened with interest to the arguments of my right


hon. and hon. Friends. The Bill builds on the precedent of Conservative policy and provides a basis for transferring property interests from the freeholder and intermediate landlords that is above all fair.
I am prepared to introduce an amendment in another place to deal with severance compensation for high-value houses. I hope that, in that spirit, my right hon. Friend and his hon. Friends will not press their amendments.

7 pm

Mr. Jopling: I have listened with great care to the Secretary of State's reply to the debate. I must apologise to him and to the House as I left the Chamber for a few minutes in the middle of the debate, but I heard all the opening speeches as well as the later ones.
My right hon. and learned Friend's promise to introduce an amendment in another place to deal with the application of severance in regard to injurious affection is welcome. However, I am disappointed that I heard nothing in his speech about the 50 per cent. floor. I understand that he intends to leave that as it is and has not moved towards our view that it should increase to 100 per cent.
I accept that one would not expect the price to be 100 per cent. of the marriage value plus the value for severance. I do not think that any of us would be interested in promoting that, but we want 100 per cent. of the marriage value. I am disappointed that my right hon. and learned Friend has not been able to move on the 50 per cent. figure. He used phrases and words that he used on Second Reading and suggested that, given the figure of not less than 50 per cent. in the Bill, the level of compensation—

Mr. Howard: May I deal with that matter and go somewhat further than my right hon. Friend wanted? In an appropriate case, if the market value were such that the tribunal properly came to the conclusion that 100 per cent. of the marriage value ought to go to the freeholder—I emphasise that it is open to them to reach that view under the provisions of the Bill—and if an extra element for injurious affection were judged appropriate, it would be right for the freeholder to have 100 per cent. of the marriage value plus an additional element for injurious affection. Those two elements are not inconsistent.
If my right hon. Friend will forgive me, I must reiterate that the 50 per cent. figure is intended to be a floor and that the tribunal, if the circumstances justify it, may award a greater proportion of the marriage value to the freeholder, up to and not excluding 100 per cent.

Mr. Jopling: We are grateful to the Secretary of State for explaining more fully. In all humility, I am bound to say that I have never had any experience of values of injurious affection with regard to severance, and thus find it difficult to put a figure on them. His remarks are therefore helpful.
I think that my right hon. and learned Friend said that the figure only applies to high-value houses and—as I understand it—not to flats.

Mr. Howard: indicated assent.

Mr. Jopling: It does apply to flats. That is a move forward, but I am disappointed that my right hon. and learned Friend has not increased the 50 per cent. floor figure.
As I was saying when I gave way to the Secretary of State, we are all concerned that he referred to 50 per cent. of the marriage value as a "fair" figure. That is the crux of the difference of opinion between the Front Bench and right hon. and hon. Members who are unhappy about the proposal. We believe that in many cases 50 per cent. could be patently unfair and we are seeking to improve it.
The House should always remember that the freeholder owned 100 per cent. of the marriage value when he granted the leasehold interest to the leaseholder. He willingly agreed to forgo that as the price for retaining the freehold interest, for the reversion of ownership of the property and for control over it.
After the Secretary of State's speech and the amendments that he has promised, I am still unhappy about the compensation and think that it will be unfair. I should like to think carefully about the implications of his remarks between now and Third Reading.
I advise my hon. Friend the Member for Weston-super Mare (Sir J. Wiggin) that there is not much point in voting on the new clause. The Opposition parties will not vote with us and the result would therefore be a foregone conclusion. However, we must consider carefully the Secretary of State's remarks and, if necessary, we can express our opinions clearly on Third Reading tomorrow.

Sir Jerry Wiggin: I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 10

QUALIFYING TENANTS TO HAVE RIGHT TO COLLECTIVE ENFRANCHISEMENT

`(l) This Chapter has effect for the purpose of conferring on qualifying tenants of flats contained in premises to which this Chapter applies on the relevant date the right, exercisable subject to and in accordance with this Chapter, to have the freehold of those premises acquired on their behalf—

(a) by a person or persons appointed by them for the purpose, and
(b) at a price determined in accordance with this Chapter; and that right is referred to in this Chapter as "the right to collective enfranchisement".

(2) This Chapter applies to any premises if—

(a) they consist of a self-contained building and the freehold of the whole of the building or of that part of the building is owned by the same person;
(b) they contain two or more flats held by qualifying tenants; and
(c) the total number of flats held by such tenants exceeds one half of the total number of flats contained in the premises.

(3) This Chapter does not apply to premises falling within subsection (2) if—

(a) any part or part of the premises is occupied, or intended to be occupied, otherwise than for residential purposes: and
(b) the internal floor area of that part of those parts (taken together) exceeds 50 per cent. of the internal floor area of the premises (taken as a whole); or
(c) the premises are premises with a resident landlord and do not contain more than three units.

(4) Subject to the provisions of section 5, a person is a qualifying tenant of a flat for the purposes of this Chapter if he is the tenant of the flat under a tenancy other than—

(a) a protected shorthold tenancy as defined in section
52 of the Housing Act 1980;


(b) a tenancy to which Part II of the Landlord and Tenant Act 1954 (business tenancies) applies;
(c) a tenancy terminable on the cessation of his employment;
(d) an assured tenancy or assured agricultural occupancy within the meaning of Part I of the Housing Act 1988.

(5) A tenant of a flat who is a landlord of a qualifying tenant of that flat is not to be regarded as being a qualifying tenant of that fiat.'.—[Mr. Battle]

Brought up, and read the First time.

Mr. Battle: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Michael Morris): I understand that it will be convenient to discuss at the same time the following amendments: No. 29, in clause 1, page 2, leave out lines 6 to 14.

No. 30, in clause 3, page 4, leave out lines 40 to 46.

No. 31, in page 5, line 1, leave out
`For the purposes of this section'.

No. 32, in clause 4, page 5, leave out lines 16 to 22.

No. 33, in page 5, leave out lines 28 to 37.

No. 34, clause 5, in page 5, line 38, leave out from beginning to end of line 7 on page 6.

No. 9, leave out lines 10 to 14.

No. 36, leave out lines 20 to 37.

Mr. Battle: As we said on Second Reading and in Committee, we welcome the thrust of leasehold reforms contained in part I of the Bill, but we are worried that the Government are being pressurised to water them down. We hope that that will not happen, because we remain concerned that many of the exclusions built into the leasehold reform measures before us are too tightly drawn. The last group of clauses tried to lead us in one direction, but we hope to press the House to go the opposite way, and we want to tackle the loopholes that the Government have left in the Bill.
I hope that the House will support new clause 10. It is widely agreed across the Floor of the House that leasehold is a debased and archaic form of tenure, that its reform is long overdue and that the Government are taking a hesitant step with a relatively modest proposal, although they have promised that full-blown commonhold proposals will he put before the House before long.
When put in practice, the qualifying rules and the valuation method will exclude many leaseholders from exercising their right to enfranchisement.
Many of those 750,000 leaseholders who at present may think that they will be enfranchised by this legislation will discover that in practice they will not be. In particular, what needs to be withdrawn from the Bill as at present drafted is the low rent test and the limiting of non-residential floor space threshold.[Interruption.]

Mr. Deputy Speaker: Order. I apologise for interrupting the hon. Member, but I must ask hon. Members to have their meetings elsewhere than in the Chamber.

Mr. Battle: I am grateful to you, Mr. Deputy Speaker. It is obvious that the dealing is still going on on the last clause. That may or may not affect the debate in the other place. We rather hope that the Government will not be swayed by the argument, even after the debate has taken place, that landlords ought to be compensated even more.
The groups campaigning for wider rights for leaseholders, such as the Leasehold Reform Co-ordinating

Committee, believe that the Bill, as it stands, is far too restrictive. That is a view with which the Opposition concur.
Leaseholders in a block of flats where more than one third of the flats are rented will be excluded, as will those who live in blocks where more than 10 per cent. of the floor space is used as a shop or office. There is also the low ground rent test, which is designed to sift out leaseholders from those renting their flats or homes. As landlords are given to increasing ground rents to make their properties unenfranchisable, even now, as these debates go on, I hope that the Minister will concede that the low rent test is inequitable and unnecessary, and ought to go.
At present, some 750,000 long-term—[Interruption.]

Mr. Deputy Speaker: Order. I apologise for interrupting the hon. Gentleman a second time. Hon. Members should know the rules of the House. They really cannot stand up in the Benches and have a conversation with each other. If they want to have a conversation, they should leave the Chamber.

Mr. Battle: In theory, about 700,000 long-term leaseholders will be enabled to buy the freeholds of their flats from their landlords, but in practice many leaseholders, including a disproportionate number of elderly people, will find it very hard to raise the necessary cash, and therefore will find that they are excluded.
Many are concerned about the low rent test. We have all had letters I know that the Secretary of State has been written to—from people in leasehold property emphasising the fact that the leasehold enfranchisement provisions in the present Bill exclude all those who have had their ground rent raised beyond the low rent test. One tenant sent the following letter to the Secretary of State:
I am advised that my impending ground rent review in 1996 will increase by thousands and will be well outside my means. This clause also has prevented me from selling my house, which has been on the market for seven years. As a widow over pensionable age I am still struggling to find a little work to keep and to maintain my home.
This new clause will give qualifying tenants the right to collective enfranchisement. Subsection (2) will allow enfranchisement where more than half of the flats are occupied by qualifying tenants. In effect, that will widen the scope of the enfranchisement at present allowed for in the Bill, which is that two thirds of the flats must be occupied by qualifying tenants.
Our new clause will exclude blocks where more than 50 per cent. of the floor space is in non-residential use. At present, the Bill excludes premises where more than 10 per cent. of the internal floor space is in non-residential use. We believe that that is far too restrictive, and our clause would increase the percentage to 50 per cent. to correspond precisely with the provisions of the Landlord and Tenant Act 1987, under which leaseholders are given the right of first refusal when a landlord decides to dispose of the freehold as a block, provided that 50 per cent. or more of the floor space is in residential use.
Subsection (3) of our new clause would amend the resident landlord exclusion so that premises are included in the enfranchisement provisions unless they have a resident landlord and do not contain more than two units.
Subsection (4) will extend the definition of the qualifying tenant to include all those tenancies other than shorthold and assured tenancies, business tenancies arid service tenancies. Again, the wording of that subsection is taken from the Landlord and Tenant Act 1987. We can see


no cogent reason why tenants other than those excluded by this subsection should not enjoy the right to collective enfranchisement, just as they enjoy the right to first refusal when the landlord disposes of the freehold.
Our amendment to the definition of a qualifying tenant will have the added advantage of avoiding the need for the low rent test and for the definition of a long lease. At whatever level a low rent or a long lease is eventually defined, there will always be boundary cases, since it is to be expected that landlords seeking to evade the provisions will deliberately choose to grant leases which fall just outside the proposed limits. By taking those two tests out of the legislation, as was done in the Landlord and Tenant Act 1987, those problems will in practice be avoided.
Subsection (5) is included to cover the possibility that there will be more than one potential qualifying tenant for a given flat—for example, where a leaseholder has let the flat on a tenancy. In this case, it will be proposed to give the right of collective enfranchisement to the lowest level of interest, which makes it most likely that the right will be given to the person occupying the flat, but without the need to introduce a residence qualification, which could cause difficulties, as we all appreciate, with second homes.
In other words, our new clause would give secure tenants rights that they will not get under the present legislation. We will be extending leasehold enfranchisement.
7.15 pm
In closing, I want to refer to three other letters, although they are really only two. During the general election campaign, the right hon. Member for Chelsea (Mr. Scott), circulated a leaflet to all leaseholders in the Chelsea constituency, sent from the Conservative campaign headquarters in Chelsea Manor street, which read:
A Conservative Government is committed to changing the basis of extending Leasehold tenure in the following ways:—Introduction of Commonhold for Leasehold flats … Extension of leases … Removal of upper limit of rateable value on houses".
I have to say that, although it had a note on the bottom telling people when polling day was, creating the impression that the people would get these rights, many of those who received that leaflet now feel that they were misled and sold short—so much so that one of them wrote direct to the Prime Minister to say that he was disturbed, because at the time of the general election he had been given an assurance by the candidate that the Tory party intended to retain in the forthcoming legislation the low rent disqualification. That was not mentioned at all in the leaflet that went out.
The letter goes on:
It is unfortunately becoming clear to me that not only are the Tory Party avoiding their election obligations, not for the first time, but also that they are being heavily influenced by the large donations made to the Tory Party by the London landlords.
Some have been very disappointed, because those who wrote direct to the Prime Minister were told in a reply on 7 April 1992, conveniently just before the general election, that they would have promised leasehold in full. I have a letter here from the person who received that reply from the Prime Minister, which says:
If the Prime Minister promises leasehold enfranchisement `in full', he should deliver leasehold enfranchisement in full

and not let certain parts of British society hide behind technical provisions cleverly drafted by solicitors which hide the real substance of the lease behind an artificial legal form.
That is what people are now discovering to have happened, and without new clause 10, which will open up leasehold reform to qualifying tenants in a wider way than is proposed in this Bill, the loopholes in the Bill will mean offering the rhetoric of rights, but not the legal substance. Landlords will be given scope to frustrate the intentions of the legislation. I believe that we should not be leaving space for Duke of Westminster spokesmen in this place and elsewhere to drive a coach and horses through what ought to be the welcome introduction of leasehold enfranchisement.
In a sense, the Government have been coy so far, and have given assurances that they will consider again the measures put to them by their Back Benchers to try to undermine the leasehold proposals. I hope that the Government will say that the leasehold proposals would be improved if they included new clause 10. That would give real rights to the 750,000 leaseholders who would benefit from the legislation.
I commend new clause 10 to the House as a means of improving and enhancing the rights of leaseholders. Having seen off their Back Benchers who tried to undermine the Bill, the Government should have the confidence to go further and give people real rights.

The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry): The new clause would allow any tenant to qualify for enfranchisement other than assured tenants under the Housing Act 1988 and some minor exceptions, so there would be no requirement for the lease to be long or to be at a low rent. It would extend the right to enfranchise well beyond the category of those who own their flats. For example, regulated tenants who pay a fair rent under the 1977 legislation, or secure tenants of a public sector landlord would be entitled to enfranchise.
Somewhat perversely, given some of the amendments put down by the Opposition in Committee, somebody with a three-week holiday let of a flat would fall within the scope of new clause 7 and would be entitled to enfranchisement.
The Government's proposals are designed to give rights to those who are likely to have the greater financial and personal investment in a building, those with flats on long leases—leases of 21 years or over—at low ground rent who regard themselves as owners of the flats.
By departing from these principles, the Labour party would put at risk any prospect of securing a revival of the rented sector. By allowing regulated tenants a right to enfranchise, the Opposition would send a very clear signal that any landlord is at risk if he dares allow another person to have a tenancy of his property. The hon. Gentleman may try to claim that excluding assured tenancies would reassure landlords, but by including regulated tenancies, or short-term tenancies of flats which fall outside the 1988 Act, they are certainly bringing rented accommodation into the scope of the Bill.
The proposal to allow tenants to buy blocks where up to half the floor area is non-residential would damage the commercial market. Tenants would not just be buying their own flats from their landlords, but would be able to secure the transfer of vastly more valuable commercial


assets. That is not what the Bill is about. Managing a portfolio of commercial property is different from managing an owner-occupied block of residential flats.
Institutional investors have made it clear that they would be unhappy about leasing commercial space in blocks managed by residential tenants. Moreover, the cost of taking on commercial property on this scale would be vastly more than many tenants could realistically afford. Shops are proportionately much more valuable than flats. So the Opposition risk the confidence of commercial investors in non-residential property and do no favours to tenants by trying to extend the scope of the Bill in this way.
The new clause would reduce from two thirds to one half the proportion of flats required to be held by qualifying tenants before a block can enfranchise. Taken together with the rule that two thirds of the qualifying tenants must wish to participate for enfranchisement to go ahead, that would mean that in some blocks only one third of the tenants would be entitled to buy out the freeholder. In those circumstances, it could hardly be argued that those qualifying tenants held the major interest in the block.
That would extend the scope of enfranchisement beyond what we regard as being reasonable. We believe that it is right that more than a bare majority would qualify.
Taken as a whole, the new clause is deeply unsatisfactory. It would move beyond giving the owners of flats likely to have the greatest interest in the block the right to acquire the freehold to situations where a minority of tenants, or tenants with only a short-term interest in the property, would have the right to dispossess a landlord and to acquire significant amounts of commercial space. I do not believe that that would be right. I do not believe that the House would consider it to be right, and I urge the House to reject the new clause.

Mr. Battle: I found it surprising that the Minister's reply, compared with the responses that he gave in Committee shows a harshening of tone. In Committee he gave assurances that the Government would introduce measures to tackle the low-rent test and the two thirds rule. That is not what we have just heard from the Minister.
I am surprised that the hon. Gentleman says that our proposals would damage the commercial market when, clearly, that has not been the effect of the Landlord and Tenant Act 1987. Our proposals would put the Bill within the context of the 1987 Act. That would have been an appropriate way to move forward to ensure that leasehold enfranchisement was a real right and not simply one so hedged with exclusions that many people would find that they were priced out or could not qualify at all.
Therefore, I believe that we should divide on the new clause. I ask hon. Members to support it.

Question put, That the clause be read a Second time:—

The House divided: Ayes 242, Noes 299.

Division No. 145]
[7.25 pm


AYES


Abbott, Ms Diane
Banks, Tony (Newham NW)


Adams, Mrs Irene
Barnes, Harry


Ainger, Nick
Barron, Kevin


Ainsworth, Robert (Cov'try NE)
Battle, John


Allen, Graham
Bayley, Hugh


Alton, David
Beckett, Margaret


Anderson, Ms Janet (Ros'dale)
Beith, Rt Hon A. J.


Armstrong, Hilary
Bell, Stuart


Austin-Walker, John
Benn, Rt Hon Tony





Bennett, Andrew F.
Griffiths, Win (Bridgend)


Benton, Joe
Grocott, Bruce


Bermingham, Gerald
Gunnell, John


Berry, Dr. Roger
Hain, Peter


Betts, Clive
Hall, Mike


Blair, Tony
Hanson, David


Blunkett, David
Hardy, Peter


Boyce, Jimmy
Harman, Ms Harriet


Boyes, Roland
Harvey, Nick


Bradley, Keith
Henderson, Doug


Bray, Dr Jeremy
Heppell, John


Brown, Gordon (Dunfermline E)
Hill, Keith (Streatham)


Brown, N. (N'c'tle upon Tyne E)
Hinchliffe, David


Bruce, Malcolm (Gordon)
Hoey, Kate


Burden, Richard
Home Robertson, John


Byers, Stephen
Hood, Jimmy


Caborn, Richard
Hoon, Geoffrey


Campbell, Mrs Anne (C'bridge)
Howarth, George (Knowsley N)


Campbell, Menzies (Fife NE)
Howells, Dr. Kim (Pontypridd)


Campbell, Ronnie (Blyth V)
Hoyle, Doug


Cann, Jamie
Hughes, Kevin (Doncaster N)


Chisholm, Malcolm
Hughes, Roy (Newport E)


Clapham, Michael
Hutton, John


Clark, Dr David (South Shields)
Ingram, Adam


Clarke, Tom (Monklands W)
Jackson, Glenda (H'stead)


Clelland, David
Jackson, Helen (Shef'ld, H)


Clwyd, Mrs Ann
Jamieson, David


Coffey, Ann
Janner, Greville


Cohen, Harry
Jones, Barry (Alyn and D'side)


Connarty, Michael
Jones, Ieuan Wyn (Ynys Môn)


Cook, Robin (Livingston)
Jones, Lynne (B'ham S O)


Corbett, Robin
Jones, Martyn (Clwyd, SW)


Corbyn, Jeremy
Jones, Nigel (Cheltenham)


Corston, Ms Jean
Jowell, Tessa


Cousins, Jim
Keen, Alan


Cox, Tom
Khabra, Piara S.


Cryer, Bob
Kilfoyle, Peter


Cummings, John
Kirkwood, Archy


Cunliffe, Lawrence
Leighton, Ron


Cunningham, Jim (Covy SE)
Lestor, Joan (Eccles)


Cunningham, Dr John (C'p'l'nd)
Lewis, Terry


Dalyell, Tam
Litherland, Robert


Darling, Alistair
Lloyd, Tony (Stretford)


Davies, Rt Hon Denzil (Llanelli)
Llwyd, Elfyn


Davies, Ron (Caerphilly)
Loyden, Eddie


Davis, Terry (B'ham, H'dge H'l)
Lynne, Ms Liz


Denham, John
McAllion, John


Dewar, Donald
McAvoy, Thomas


Dixon, Don
McCartney, Ian


Dobson, Frank
Macdonald, Calum


Donohoe, Brian H.
McFall, John


Dowd, Jim
Mackinlay, Andrew


Dunnachie, Jimmy
McLeish, Henry


Dunwoody, Mrs Gwyneth
McMaster, Gordon


Eagle, Ms Angela
McNamara, Kevin


Eastham, Ken
Madden, Max


Enright, Derek
Mahon, Alice


Etherington, Bill
Mandelson, Peter


Evans, John (St Helens N)
Marek, Dr John


Ewing, Mrs Margaret
Marshall, David (Shettleston)


Fatchett, Derek
Marshall, Jim (Leicester, S)


Faulds, Andrew
Martlew, Eric


Fisher, Mark
Meale, Alan


Flynn, Paul
Michael, Alun


Foster, Derek (B'p Auckland)
Michie, Bill (Sheffield Heeley)


Foster, Don (Bath)
Michie, Mrs Ray (Argyll Bute)


Foulkes, George
Milburn, Alan


Fraser, John
Miller, Andrew


Galloway, George
Mitchell, Austin (Gt Grimsby)


Gapes, Mike
Moonie, Dr Lewis


Garrett, John
Morgan, Rhodri


George, Bruce
Morley, Elliot


Gerrard, Neil
Morris, Rt Hon A. (Wy'nshawe)


Gilbert, Rt Hon Dr John
Morris, Estelle (B'ham Yardley)


Godman, Dr Norman A.
Morris, Rt Hon J. (Aberavon)


Godsiff, Roger
Mowlam, Marjorie


Golding, Mrs Llin
Mudie, George


Gordon, Mildred
Mullin, Chris


Gould, Bryan
Murphy, Paul


Griffiths, Nigel (Edinburgh S)
Oakes, Rt Hon Gordon






O'Brien, Michael (N W'kshiro)
Smith, Llew (Blaenau Gwent)


O'Brien, William (Normanton)
Snape, Peter


Olner, William
Soley, Clive


O'Neill, Martin
Spearing, Nigel


Orme, Rt Hon Stanley
Spellar, John


Parry, Robert
Squire, Rachel (Dunfermline W)


Pickthall, Colin
Steinberg, Gerry


Pike, Peter L.
Stevenson, George


Pope, Greg
Stott, Roger


Powell, Ray (Ogmore)
Strang, Dr. Gavin


Prentice, Ms Bridget (Lew'm E)
Straw, Jack


Prentice, Gordon (Pendle)
Taylor, Mrs Ann (Dewsbury)


Primarolo, Dawn
Taylor, Matthew (Truro)


Purchase, Ken
Thompson, Jack (Wansbeck)


Radice, Giles
Turner, Dennis


Raynsford, Nick
Vaz, Keith


Redmond, Martin
Walker, Rt Hon Sir Harold


Reid, Dr John
Walley, Joan


Robertson, George (Hamilton)
Wardell, Gareth (Gower)


Robinson, Geoffrey (Co'try NW)
Watson, Mike


Roche, Mrs. Barbara
Wicks, Malcolm


Rogers, Allan
Williams, Rt Hon Alan (Sw'n W)


Rooney, Terry
Williams, Alan W (Carmarthen)


Ross, Ernie (Dundee W)
Wilson, Brian


Ruddock, Joan
Winnick, David


Salmond, Alex
Wise, Audrey


Sedgemore, Brian
Worthington, Tony


Sheerman, Barry
Wray, Jimmy


Sheldon, Rt Hon Robert
Wright, Dr Tony


Shore, Rt Hon Peter
Young, David (Bolton SE)


Simpson, Alan



Skinner, Dennis
Tellers for the Ayes:


Smith, Andrew (Oxford E)
Mr. Jon Owen Jones and


Smith, C. (Isl'ton S & F'sbury)
Mr. Eric Illsley.




NOES


Adley, Robert
Butterfill, John


Ainsworth, Peter (East Surrey)
Carlisle, John (Luton North)


Aitken, Jonathan
Carlisle, Kenneth (Lincoln)


Alexander, Richard
Carrington, Matthew


Alison, Rt Hon Michael (Selby)
Carttiss, Michael


Allason, Rupert (Torbay)
Cash, William


Amess, David
Channon, Rt Hon Paul


Ancram, Michael
Chaplin, Mrs Judith


Arbuthnot, James
Chapman, Sydney


Arnold, Jacques (Gravesham)
Churchill, Mr


Arnold, Sir Thomas (Hazel Grv)
Clappison, James


Ashby, David
Clark, Dr Michael (Rochford)


Aspinwall, Jack
Clarke, Rt Hon Kenneth (Ruclif)


Atkinson, David (Bour'mouth E)
Clifton-Brown, Geoffrey


Baker, Rt Hon K. (Mole Valley)
Coe, Sebastian


Baker, Nicholas (Dorset North)
Colvin, Michael


Baldry, Tony
Congdon, David


Banks, Matthew (Southport)
Conway, Derek


Banks, Robert (Harrogate)
Coombs, Anthony (Wyre For'st)


Bates, Michael
Coombs, Simon (Swindon)


Batiste, Spencer
Cope, Rt Hon Sir John


Bellingham, Henry
Couchman, James


Bendall, Vivian
Cran, James


Beresford, Sir Paul
Currie, Mrs Edwina (S D'by'ire)


Biffen, Rt Hon John
Davies, Quentin (Stamford)


Body, Sir Richard
Davis, David (Boothferry)


Bonsor, Sir Nicholas
Day, Stephen


Booth, Hartley
Deva, Nirj Joseph


Boswell, Tim
Devlin, Tim


Bottomley, Peter (Eltham)
Dickens, Geoffrey


Bottomley, Rt Hon Virginia
Dicks, Terry


Bowden, Andrew
Dorrell, Stephen


Bowis, John
Douglas-Hamilton, Lord James


Boyson, Rt Hon Sir Rhodes
Dover, Den


Brazier, Julian
Duncan, Alan


Bright, Graham
Duncan-Smith, Iain


Brooke, Rt Hon Peter
Dunn, Bob


Brown, M. (Brigg & Cl'thorpes)
Durant, Sir Anthony


Browning, Mrs. Angela
Dykes, Hugh


Bruce, Ian (S Dorset)
Eggar, Tim


Burns, Simon
Elletson, Harold


Burt, Alistair
Emery, Rt Hon Sir Peter


Butcher, John
Evans, David (Welwyn Hatfield)


Butler, Peter
Evans, Jonathan (Brecon)





Evans, Nigel (Ribble Valley)
Lidington, David


Evans, Roger (Monmouth)
Lightbown, David


Evennett, David
Lilley, Rt Hon Peter


Faber, David
Lloyd, Peter (Fareham)


Fabricant, Michael
Lord, Michael


Fairbairn, Sir Nicholas
Luff, Peter


Fenner, Dame Peggy
Lyell, Rt Hon Sir Nicholas


Field, Barry (Isle of Wight)
MacGregor, Rt Hon John


Fishburn, Dudley
Maclean, David


Forman, Nigel
McLoughlin, Patrick


Forsyth, Michael (Stirling)
McNair-Wilson, Sir Patrick


Forth, Eric
Madel, David


Fowler, Rt Hon Sir Norman
Maitland, Lady Olga


Fox, Dr Liam (Woodspring)
Malone, Gerald


Fox, Sir Marcus (Shipley)
Mans, Keith


Freeman, Roger
Marland, Paul


French, Douglas
Marlow, Tony


Fry, Peter
Marshall, John (Hendon S)


Gale, Roger
Martin, David (Portsmouth S)


Gardiner, Sir George
Mawhinney, Dr Brian


Garel-Jones, Rt Hon Tristan
Mellor, Rt Hon David


Garnier, Edward
Merchant, Piers


Gill, Christopher
Milligan, Stephen


Gillan, Cheryl
Mills, Iain


Goodlad, Rt Hon Alastair
Mitchell, Sir David (Hants NW)


Goodson-Wickes, Dr Charles
Moate, Sir Roger


Gorman, Mrs Teresa
Molyneaux, Rt Hon James


Grant, Sir Anthony (Cambs SW)
Monro, Sir Hector


Greenway, Harry (Ealing N)
Montgomery, Sir Fergus


Greenway, John (Ryedale)
Moss, Malcolm


Griffiths, Peter (Portsmouth, N)
Needham, Richard


Grylls, Sir Michael
Nelson, Anthony


Hague, William
Neubert, Sir Michael


Hamilton, Rt Hon Archie (Epsom)
Newton, Rt Hon Tony


Hamilton, Neil (Tatton)
Nicholls, Patrick


Hampson, Dr Keith
Nicholson, David (Taunton)


Hanley, Jeremy
Nicholson, Emma (Devon West)


Hannam, Sir John
Norris, Steve


Hargreaves, Andrew
Onslow, Rt Hon Sir Cranley


Hawkins, Nick
Oppenheim, Phillip


Hawksley, Warren
Ottaway, Richard


Hayes, Jerry
Page, Richard


Heald, Oliver
Paice, James


Heathcoat-Amory, David
Patnick, Irvine


Hendry, Charles
Patten, Rt Hon John


Heseltine, Rt Hon Michael
Pattie, Rt Hon Sir Geoffrey


Higgins, Rt Hon Sir Terence L.
Pawsey, James


Hill, James (Southampton Test)
Peacock, Mrs Elizabeth


Hogg, Rt Hon Douglas (G'tham)
Pickles, Eric


Horam, John
Porter, Barry (Wirral S)


Hordern, Rt Hon Sir Peter
Porter, David (Waveney)


Howard, Rt Hon Michael
Portillo, Rt Hon Michael


Hughes Robert G. (Harrow W)
Powell, William (Corby)


Hunt, Rt Hon David (Wirral W)
Rathbone, Tim


Hunt, Sir John (Ravensbourne)
Redwood, John


Hunter, Andrew
Richards, Rod


Hurd, Rt Hon Douglas
Riddick, Graham


Jack, Michael
Rifkind, Rt Hon. Malcolm


Jackson, Robert (Wantage)
Robathan, Andrew


Jenkin, Bernard
Roberts, Rt Hon Sir Wyn


Johnson Smith, Sir Geoffrey
Robertson, Raymond (Ab'd'n S)


Jones, Gwilym (Cardiff N)
Robinson, Mark (Somerton)


Jones, Robert B. (W Hertfdshr)
Roe, Mrs Marion (Broxbourne)


Jopling, Rt Hon Michael
Rowe, Andrew (Mid Kent)


Kellett-Bowman, Dame Elaine
Rumbold, Rt Hon Dame Angela


Key, Robert
Ryder, Rt Hon Richard


Kilfedder, Sir James
Sackville, Tom


Kirkhope, Timothy
Sainsbury, Rt Hon Tim


Knapman, Roger
Scott, Rt Hon Nicholas


Knight, Mrs Angela (Erewash)
Shaw, David (Dover)


Knight, Greg (Derby N)
Shaw, Sir Giles (Pudsey)


Knight, Dame Jill (Bir'm E'st'n)
Shephard, Rt Hon Gillian


Knox, David
Shersby, Michael


Lait, Mrs Jacqui
Sims, Roger


Lamont, Rt Hon Norman
Skeet, Sir Trevor


Lang, Rt Hon Ian
Smith, Sir Dudley (Warwick)


Lawrence, Sir Ivan
Smith, Tim (Beaconsfield)


Legg, Barry
Soames, Nicholas


Leigh, Edward
Speed, Sir Keith


Lennox-Boyd, Mark
Spencer, Sir Derek






Spicer, Sir James (W Dorset)
Twinn, Dr Ian


Spicer, Michael (S Worcs)
Viggers, Peter


Spink, Dr Robert
Waldegrave, Rt Hon William


Spring, Richard
Walden, George


Sproat, Iain
Walker, Bill (N Tayside)


Squire, Robin (Hornchurch)
Waller, Gary


Steen, Anthony
Ward, John


Stephen, Michael
Wardle, Charles (Bexhill)


Stern, Michael
Waterson, Nigel


Stewart, Allan
Watts, John


Streeter, Gary
Wells, Bowen


Sumberg, David
Wheeler, Rt Hon Sir John


Sweeney, Walter
Whitney, Ray


Sykes, John
Whittingdale, John


Tapsell, Sir Peter
Widdecombe, Ann


Taylor, Ian (Esher)
Wiggin, Sir Jerry


Taylor, John M. (Solihull)
Willetts, David


Temple-Morris, Peter
Wilshire, David


Thompson, Sir Donald (C'er V)
Winterton, Mrs Ann (Congleton)


Thompson, Patrick (Norwich N)
Wolfson, Mark


Thornton, Sir Malcolm
Wood, Timothy


Thurnham, Peter
Yeo, Tim


Townend, John (Bridlington)
Young, Sir George (Acton)


Townsend, Cyril D. (Bexl'yh'th)



Tracey, Richard
Tellers for the Noes:


Tredinnick, David
Mr. Andrew MacKay and


Trend, Michael
Mr. Andrew Mitchell.


Trotter, Neville

Question accordingly negatived.

New clause 15

SAVING FOR DESIGNATED HERITAGE PROPERTIES

`—(1) Nothing in this Part of this Act shall apply to property which:—

(a) (i) belongs to a body not established or conducted for profit; and
(ii) in relation to which the Treasury has for the time being given a direction under section 26 of the Inheritance Tax Act 1984;
(b) is for the time being designated by the Treasury under section 31(1)(b), (c) or (d) of the Inheritance Tax Act 1984.

(2) Where an application to the Treasury for a direction under section 26 of the Inheritance Tax Act 1984 in relation to a property or designation of a property under section 31(1)(b), (c) or (d) of the Inheritance Tax Act 1984 is or has been made at any time before the expiry of one year from the coming into force of this section then subject to subsection (3) below if (before or after the making of the application) a notice is given by a tenant of a house of his desire to have the freehold under Part 1 of the Leasehold Reform Act 1967 ("the tenant's notice") or a notice is given under section I1 ("the initial notice")—

(a) no further proceedings need be taken towards the determination of the terms of the proposed acquisition to which the notice relates beyond those which appear to the landlord in the case of the tenant's notice or the reversioner in the case of an initial notice, to be reasonable; but
(b) the tenant in the case of the tenant's notice or the nominee purchaser in the case of the initial notice may at any time withdraw the notice by a further notice in writing given to the landlord in the case of a tenant's notice or the reversioner in the case of the initial notice and he shall not be required to make payment to the landlord, reversioner or any other relevant landlord in respect of costs incurred by reason of the notice withdrawn.

(3) Subsection (2) above shall cease to apply—

(a) if within a period of two years from the date of the application it is withdrawn or the designation is refused or not given or no direction is given; or

(b) if the applicant has not, by advertisement or by other appropriate means given adequate notice to persons interested informing them of the application for designation.

(4) In the case where an application is withdrawn or refused subsection (2) does not apply at any time falling after—

(a) the date of withdrawal of the application, or
(b) the date when the decision of the Treasury refusing the application becomes final,

as the case may be.'.[Mr. Peter Ainsworth.]

Brought up, and read the First time.

Mr. Peter Ainsworth: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Michael Morris): I understand that with this it will be convenient to discuss also the following: Amendment No. 116, in clause 4, page 5, line 30, at end insert—
'( ) This chapter does not apply to premises forming part of a landholding for the time being designated as a heritage area under Schedule [Heritage area] to this Act.'.

Amendment No. 1, in page 5, line 37, at end insert—

'(5) This chapter does not apply to premises which—

(a) are for the time being designated by the Treasury under section 31(1)(b), (c) or (d) of the Inheritance Tax Act 1984 or paragraph 3(3) of Schedule 4 to that Act, or
(b) on application by the landlord, satisfy a leasehold valuation tribunal that they would qualify for designation under the aforesaid provisions of the Inheritance Tax Act 1984.

(6) The provisions of sections 63(4) and (5) shall apply to any application under section 4(5).

(7) Any application under section 4(5) must be made within the period of two years beginning with the date of the coming into force of this section.'.

Amendment No. 117, in clause 5, page 6, line 4, at end insert

'or
(d) the lease is of a flat within premises forming part of a landholding for the time being designated as a heritage area under Schedule [Heritage area] to this Act.'.

Amendment No. 118, in clause 5, page 63, line 31, after `shall', insert
 , if the house is not comprised in a landholding designated as a heritage area in accordance with section [] of, and Schedule [Heritage area] to, the Housing and Urban Development Act 1993.'.

Amendment No. 2, in clause 59, page 63, line 42, at end insert—

'(3) This section does not apply to any house which

(a) is for the time being designated by the Treasury under section 3(1)(b), (c) or (d) of the Inheritance Tax Act 1984 or paragraph 3(3) of Schedule 4 to that Act, or
(b) on application by the landlord satisfies a leasehold valuation tribunal that is within an area which would qualify for designation under the aforesaid provisions of the Inheritance Tax Act 1984.

(4) The provisions of sections 63(4) and (5) of the Housing and Urban Development Act 1993 shall apply to any application under section 1A(3).

(5) Any application under section 1A(3) must be made within the period of two years beginning with the date of the coming into force of this section.'.

Amendment No. 119, new schedule:—

'HERITAGE AREA

1. In this Schedule—
conservation area" means an area for the time being designated under section 69 of the Planning (Listed Buildings and Conservation Areas) Act 1990;


landholding" means a group of properties adjoining or in close proximity to one another and whether or not separated by other properties, each of which has been for a period in excess of 20 years prior to the coming into force of Part I of this Act under the control of one landlord whether or not subject to one or more tenancies;
listed building" has the meaning given in section 1(5) of the Planning (Listed Buildings and Conservation Areas) Act 1990;
and references to the Secretary of State are references to the Secretary of State for National Heritage.

2. The Secretary of State may, in consultation with the Historic Buildings and Monuments Commission for England (commonly called English Heritage) and in accordance with the provisions of this Schedule, designate a landholding situated in England as a heritage area for the purpose of this Act and the Leasehold Reform Act 1967.

3. The Secretary of State shall not designate a landholding as a heritage area—

(a) except upon an application made within twelve months beginning with the coming into force of Chapter I or Chapter II of Part I of this Act; and
(b) unless he is satisfied that the landlord has, by advertisement or otherwise as the Secretary of State may require, given adequate notice to persons interested, informing them of the application for designation and inviting them to make representations to the Secretary of State for or against the application within 28 days of such notice being given,

and before designating a landholding as a heritage area the Secretary of State shall consider any representations so made within that time, and if from those representations it appears to him that there may be grounds for refusing the application, he shall afford to those opposing the application, and on the same occasion to the applicant and such (if any) as he thinks fit of those in favour of the application, an opportunity to be heard by a person appointed by him for the purpose, and shall consider the report of that person.

4. Subject to paragraph 3, a landholding shall be designated by the Secretary of State as a heritage area if—

(a) it or a substantial part of it was contained within a conservation area at the coming into force of Part I of this Act;
(b) at least one-fifth of the area covered by buildings forming part of the landholding measured on plan comprises listed buildings;
(c) the landlord has undertaken to comply with a code of estate management practice in relation to the landholding; and
(d) in his opinion the landholding is—

(i) of outstanding architectural or historic interest, and
(ii) its continued existence with one landlord and management in accordance with the code of estate management practice will make a material contribution to its preservation or the enhancement of its character or appearance.

5. For the purposes of paragraph 4, a code of estate management practice in relation to a landholding shall—

(a) specify the management arrangements and leasing policy (including the length of leases granted and policy on renewal) and give practical guidance as to their operation; and
(b) be no more onerous or restrictive in its impact upon tenants as a whole than the policies and practices adopted in relation to the estate in the period of five years prior to the application for designation.

6. A failure on the part of any person to comply with any provision of a code or estate management practice for the time being approved under this Schedule shall not of itself render him liable to any proceedings but in any proceedings before a court or tribunal—


(a) any code of estate management practice approved under this Schedule shall be admissible in evidence; and
(b) any provisions of any such code which appears to the court or tribunal to be relevant to any question arising in the proceedings shall be taken into account in determining that question.

7. The Secretary of State shall be under a duty, so far as it appears to him practicable from time to time, to keep under review the management of heritage areas and to consider any matter which is the subject of a representation (other than one appearing to him to be frivolous or trivial) made to him by or on behalf of a person appearing to him to have an interest in that matter.

8. The Secretary of State shall be under a duty to take into account whether there has been any failure to comply with a code of estate management practice in determining whether to revoke or renew a designation.

9. The Secretary of State may at any time if it appears to him desirable to do so—

(a) revoke the designation of a heritage area or substitute for a landholding so designated a part of that landholding if, in either case, it appears to him that the criteria for designation are no longer met; or
(b) modify or replace a code of practice applicable to a heritage area.

10. Prior to taking any action under paragraph 9, the Secretary of State shall give reasonable notice of his intention and afford an opportunity to persons interested in the matter to make representations.

11.—(1) Without prejudice to paragraph 9, the designation of a landholding as a heritage area and any renewal of designation shall cease to have effect ten years after the date of its designation or, as the case may be, renewal unless application is made prior to that date for its renewal.

(2) The provisions of this Schedule other than paragraph 3(a) shall apply in relation to any renewal of a designation as they apply in relation to an initial designation.'.

Mr. Ainsworth: Unlike the other new clauses and amendments that we have discussed today, new clause 15 does not seek to examine the fundamentals of leasehold reform. My right hon. and hon. Friends have eloquently made the case on behalf of those who are worried about the wider implications of leasehold reform. However, the new clause does not seek to deal with them.
It is a modest new clause, which serves a modest but important purpose. It reflects some specific concerns raised by English Heritage and the Historic Houses Association. It involves a technical adjustment to ensure that an existing right is permitted to continue unimpaired under the Bill.
To endure that our national heritage does not suffer as a consequence of inheritance tax through the forced sale and break-up of important properties, assets of outstanding historic or architectural interest can, under existing arrangements, as reflected in section 26 of the Inheritance Tax Act 1984, be exempted from such tax if they are made over to a non-profit making body. They can also be designated by the Treasury under section 31 of the same Act, with the result that they can be conditionally exempt from inheritance tax. At present, the leasehold enfranchisement provisions of the Bill will, or could, undermine that important protection.
The exercise of enfranchisement rights over a part of an estate which has been given conditional exemption from inheritance tax might be deemed by the Inland Revenue to break the undertaking to maintain the character and integrity of the whole property. Through no fault of his


own, the owner could be faced with paying tax on not only the value received for the disposal but the value of the whole estate which had previously been exempted.
That could also work the other way round, to the detriment of heritage properties, by preventing action which is necessary to preserve historic buildings in good order. For example, a major heritage property in Warwickshire is currently governed by a body of trustees which is granted exemption under section 26 of the Inheritance Tax Act 1984. The trustees are short of funds to ensure the good repair and upkeep of an important heritage building. They have come up with a scheme to convert the top floor of the principal building into flats and to sell them on long leases. Only be selling them on long leases will they be able to raise sufficient money to make the exercise worth while.
However, the trustees wondered what the Bill's consequences will be for their inheritance tax exemption, and they have stalled. Already, as a result of the proposals, an historic building of major national importance is not getting the much-needed money for its upkeep. Without the new clause, the funds may never be forthcoming. New clause 15 would avoid such pitfalls by excluding designated properties from the application of part I of the Bill. It would also specify a limited period of one year during which designation may be sought for potentially elibible properties. During that time, and until the Treasury has made its decision, anyapplications to enfranchise will be frozen.
The number of estates which would benefit from the clause is small. I understand that only about 60 estates are currently designated for inheritance tax exemption, but each one is of vital national importance through its contribution to our heritage. In each case, the consequence of the Bill could—I do not exaggerate—be catastrophic. The new clause does nothing to undermine part I of the Bill, but it permits the continued safeguarding of our heritage, an aim of which I hope all hon. Members would approve.
I cannot believe that it is the intention of the Minister for Housing and Planning to jeopardise the integrity of our most important heritage buildings, so I hope that he will look favourably on new clause 15. It would have been impossible not to note a certain gloom among Ministers this afternoon. By proposing a helpful new clause, I hope to give my hon. Friend the Minister the opportunity to cheer himself by being helpful in return and to cheer the House by his acknowledgement of the merits of new clause 15.

Mr. Peter L. Pike: The hon. Member for Surrey, East (Mr. Ainsworth) said that there was gloom among members of the Government Front Bench, but it is not so much gloom as their being squeezed to make a few concessions to prevent some of the worst excesses of Conservative Back Benchers trying to press some amendments much further than the Government wished. We certainly saw some manoeuvring to ensure that that did not happen.
To some extent, the new clause falls into the same category as some of the issues that we debated earlier, in that it is basically misleading. This new clause, in particular, is spurious. It tries to wreck the Bill's objectives. The Minister has said repeatedly that the Government wish to enable as many people as possible to exercise the right of enfranchisement. The new clause is

another attempt to increase the categories of people who cannot take advantage of the proposals. My hon. Friend the Member for Leeds, West (Mr. Battle) tried to go in the opposite direction with the previous new clause by proposing to extend the right of enfranchisement. We clearly have different objectives.
The Minister claims that the Government have sought to give enfranchisement to people with leasehold tenure of property, but we claim that we are trying to do more than the Government, and certainly more than Conservative Back Benchers. I have no sympathy with the argument that certain properties should be excluded from the provisions on the basis of the heritage. We do not intend to support the new clause if there is a Division on it.
I have a copy of a letter written to the Minister on 25 November by Roderick Barr. He says:
I am amused when I hear the argument that freeholders are the guardians of the heritage. We have received only one cursory visit from the Estate's representative in 8 years. Preserving the heritage has in practice been done by Islington Council's planning officers and English Heritage (the houses are Grade II listed), and paid for out of the pockets of long leaseholders, such as myself. Nor does the estate seem to be a particularly good landlord to those tenants who still 'rent' (as opposed to 'own'). If you walk around the square it is immediately obvious from the condition of the houses which are owned privately on long leases and which are still rented out by the Estate; only the owner-occupied houses are well maintained.
The letter shows that it is usually not the landlords of such properties who are likely to maintain the heritage and character of estates: it is the owner-occupiers who have a vested interest in ensuring that their properties are maintained.
The Government have used that argument to an extent about the sale of council houses. One reason why they advocated the sale of council houses was, they said, that tenants who became owners would invest money in their properties. Our argument on that was that properties should be available for rent by those who had to rent and by those who chose to rent. The argument that landlords are better at protecting the heritage is not valid.
The Duke of Westminster has been mentioned a number of times in our debate today. His new stately home, Eaton hall in Cheshire, cannot be envisaged as an asset to our heritage. It is of a modern design and even in 200 years' time, if it is still standing, it will not be listed by a future Labour Government—[Interruption.] Indeed, we might have been in office continually for 200 years by then, and we should have been able to make the changes that we wanted.
A letter from the Minister was printed by The Spectator on 31 October 1992:
Sir: John Martin Robinson ('When reform means ruin', 24 October) forecasts dire effects from our proposals for leasehold reform. But has Dulwich Village become squalid as a result of the 1967 reforms? Has Pimlico decayed or improved since enfranchisement? I am convinced that the speculation somewhat extravagantly expressed in his piece is unfounded.
I hope that the Minister will confirm that that is still his view and that he believes that there is no reason why we should include a provision in the Bill to prevent people from enfranchising on the false basis that that would better protect the heritage. I hope that the Minister remains strongly of that view.
Another letter in The Spectator of 7 November 1992 was from Paul Barnes of London, N1:
The claim that it is only the leasehold system that can preserve the character of parts of central London is


ridiculous. No other countries apart from England and Wales have a leasehold system and yet the character and grandeur of cities like Paris, Rome and even Edinburgh are well retained. You only have to look at Bath or York, where the property is mostly freehold, to see that areas can be conserved without the leasehold system.
That view is at the root of our debate.

Mr. Roger Evans: I suggest that the difference in Rome, in Edinburgh and in the other examples is that systems of law other than the English system enable some form of social, communal control over the alteration to and development of property for the public good. It is the classic lack of such protection with English freehold property which is the cause of the difficulty.

Mr. Pike: The letter also referred to Bath and to York, which are not affected by different systems of law. If the hon. Member for Monmouth (Mr. Evans) had been a Member of Parliament when the Greater London council was being abolished, he might have been convinced that the GLC played a better role in protecting our heritage.
Much of the legislation introduced by previous Governments to protect our heritage has largely been eroded by this Government's actions since coming to office in 1979. With a Tory Government, profit and short-term gain tend to be of greater interest than protecting our heritage, whether buildings or our industrial heritage. The Government's record in this respect is not a great credit to them. The hon. Member for Monmouth is mistaken in his view.
The estates have not played a good role in protecting the heritage over the years. Articles were written about the demolition of Paradise row in 1906. Lord Cadogan's estate took steps to destroy parts of historic Chelsea because it wanted to make money out of the developments that would be possible once the heritage had been destroyed.
There are many similar examples over the years. Late one night, the House debated a Bill that would have removed certain protections for the Grosvenor buildings along the River Thames. The Bill would have removed restrictions that limited how those properties could be developed.

Mr. Peter Ainsworth: Even if the hon. Member for Burnley (Mr. Pike) is correct about the way in which estates have looked after their properties over the years—many of us would disagree—I cannot understand why he seems to suggest that we should not protect national heritage properties today.

Mr. Pike: The hon. Gentleman must accept that I do not argue for a moment that we should not protect the heritage. In Committee, we talked about management and other schemes to ensure that the character of buildings would be protected. I referred to many areas of character, such as the new towns and certain villages, which have been protected over the years by agreements about their character. The hon. Gentleman will be aware of many examples of freehold properties being acquired by the people living in them, but one could still take sensible steps to protect the character of buildings.
Opposition Members would not advocate a Bill that allowed the devastation of some of the character of London. Many hon. Members will be gravely concerned about some developments that have taken place in recent

years. I am sure that, if they could, hon. Members would think again before they destroyed buildings to make way for new developments in London and many other parts of the country. For example, in Burnley there is no way that we would allow the market hall to be destroyed.
8 pm
The Minister has been to my constituency on more than one occasion. He will accept that our poor, old houses that lack style and need money spent on them—even if we could get it from the Government—have character because they are built with stone. That character is worth preserving— in fact, our stone buildings are a unique feature of north-east Lancashire.
In more modern times, on 26 January 1962, an article in The Daily Telegraph stated:
Extensive rebuilding is planned in Chelsea by the Cadogan Estate on land it owns in Sloane Street, Pont Street, Sloane Square, and Lower Sloane Street." At that time, the estate was seeking planning approval from London county council. One must accept that it was not ownership that prevented buildings from being destroyed, but, in many cases, local authorities' refusal to grant planning permission.
I cannot imagine the new clause preserving our heritage. Like the hon. Member for Surrey, East, I certainly do not wish our heritage to be destroyed; I wish it to be protected. The new clause was moved not with that intention. I cannot say that the hon. Member for Surrey, East is misleading the House, but he is taking us along a false path if he believes that his new clause is the best way of preserving the heritage. Whatever the hon. Gentleman thinks. the prime intention of the new clause is to prevent people from enfranchising. The Bill will remove certain people's rights to exercise the right which the Bill, in theory, is supposed to give them.

Sir Jerry Wiggins: The wishes of the hon. Member for Burnley (Mr. Pike) are most commendable, but I fear that he completely misreads the situation, particularly in great cities such as London. Amendment No. 19 has been tabled by my hon. Friend the Member for Staffordshire, South (Mr. Cormack). He apologises for not being with us this evening; he is suffering from the unfortunate illness of mumps. I am sure that my hon. Friend will have our sympathy; his heart is very much in this matter.
The amendment defines heritage areas as those which are wholly or substantially
within a conservation area
with
at least one-fifth of the area covered by … listed buildings
where
the landlord has undertaken to comply with a code of estate management practice
and the land holding containing the heritage area is
of outstanding architectural or historical interest
and its preservation or enhancement would be secured by management by
one landlord … in accordance with a code of estate management practice".
The way to preserve estates with their historical aspirations already so successfully preserved is by exempting the small number concerned. My hon. Friend the Member for Surrey, East (Mr. Ainsworth) acknowledges that we are talking about not a large number of estates but a few particularly special ones.
Section 19 of the Leasehold Reform Act 1967 is not enough. I cannot see that section 19 can be amended by stiffening its provisions when, by its very nature, the success of section 19 depends on the spin of the roulette


wheel as to how many leaseholders apply to enfranchise. The statutory controls are not enough. It is necessary to find a stronger weapon to ensure the continuation of great national monuments.
It might be argued that the new clause might provide a loophole through which the owners of an ordinary estate could jump and avoid the so-called benefits which are assumed to be achieved by the Bill. I am talking about exempting the extraordinary, the great and the nationally important; there are only a few.
A landlord who might secure benefits, if the clause were to be included in the Bill, will be subject to a code of estate management practice, which will have to be approved by the Secretary of State. Such a code will specify the management arrangements, and I understand that the proposal is that the Secretary of State for National Heritage would be responsible for that provision.
We in this country have good protection from the destruction of distinguished buildings and from the making of insensitive alterations to such buildings, but there exist some areas of enormous value which, al though they are subject to statutory controls, need more powerful protection. By that I mean the discipline and benefit of leasehold controls.
Hon. Members are pressed for time, but I quote briefly from a book written by a man named Malcolm in 1810 about the squares of London and how they came to be a great feature of our capital city. From their auspicious start, the squares have been the envy of the world. Malcolm wrote:
the exertions of our fathers in the general improvement of houses and streets, have left us with little to do. Repairing-leases contribute greatly to the handsome appearance of the houses, everything is in order.
Even the Labour Government in 1966 went some way to recognising the benefits of leasehold. Their White Paper entitled "Leasehold Reform in England and Wales" states:
There are some comprehensively managed leasehold estates where enlightened management contributes greatly to the well being of the residents by maintaining the character of estates. It would not be fair to deny leaseholders on such estates the right of enfranchisement, but it would be equally unfair to the other residents on the estate if the exercise of this right prevented the benefits of comprehensive management from being any longer effective.
I remind the House that that comes from a Labour White Paper. It goes on:
The Government propose that if the estate is recognised by the appropriate Minister as a well managed estate, enfranchisement will be subject to an agreed scheme for continued estate management, with suitable provision for determination in the event of disagreement.
That was the view of the then Labour Government.
That Government pressed on and enacted section 19 of the Leasehold Reform Act 1967, which has had mixed success. The scheme of management arrangement has proved to be workable only where it has been administered by a trust with the primary aim of securing long-term preservation of an area or where only a small proportion of it could be enfranchised.
It simply cannot be right that we risk national monuments in the lottery of enfranchisement. I hope, therefore, that, through amendment No. 119, we might provide national monuments with better protection, provide a better and more practical solution than section 19 of the Leasehold Reform Act, provide a fair deal to tenants, although not enfranchising their leaseholds,

support the statutory powers of conservation areas and listed buildings, and prevent avoidance by others who seek a loophole.
It is easy to be wise after the event. There will be no going back on this matter. Once the great estates of London and elsewhere have been broken up, they will never be put back together. The example of Bournemouth springs to mind, but there are bound to be many others. We shall lose the cohesion, good management—of which there can be no question—the architectural appearance and one of the great attractions of our national capital.

Mr. Roger Evans: In support of what my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) has just said, I add a further argument. The hon. Member for Burnley (Mr. Pike) failed to analyse ownership, public intervention or timing, all of which are relevant to the issue of whether heritage is to be preserved. Amendment No. 119 is specifically designed to deal with that problem in the context of the legislation.
If one adopts the blunderbuss approach, as the hon. Member for Burnley did, to say that the previous Duke of Westminster destroyed Butterfield's masterpiece of Eaton hall in the 1960s is unarguable. No one would let the present duke do anything like it. At the same time, the atrocities that the late Lord Cadogan proposed in the 1960s for Chelsea would nowadays be regarded as the dark ages, but there must be some carefully qualified value judgments.
If the hon. Member for Burnley looked, for example, at a video of the film "Passport to Pimlico", he would see that there is something in the argument that the Duke of Westminster's withdrawal from the southern part of his estate has not been associated necessarily with the degree of social control that leads to improvement.
I am prepared to concede fully that possibly public intervention in certain circumstances leads to improvements of the environment. I am prepared to say that Southwark council, under Labour control in the 1970s, did some excellent work until it ran out of resources or will. I would even go so far as to say that the historic buildings section of London county council had a unique distinguished record for preserving the environment and the valuable parts of it. I would go so far as to concede that, in the sales of council houses, covenants were not imposed to protect the environment sufficiently. That has happened.
What we are talking about in the context of the Bill and amendment No. 119, in particular, is that certain parts of our country are especially distinguished with the richness of their architectural history and value to the environment. The failure of English freehold law has existed since the statute quia emptores—that one cannot impose a positive obligation on a freehold purchaser, whether it is to paint a front door or to turn up in armour on horseback for 40 days a year.
It may have been a good policy at one time, but the fact that it has been the case since the middle ages has meant that, for example, one can scarcely buy a freehold flat in England. One can buy a freehold flat in Scotland. That is why England developed differently under a different code of law. In Paris, one can control the development of Baron Hausman terraces because one needs a permit from the prefect. It is different in England.
8.15 pm
The issue with which we are dealing in the amendment is a peculiar product of England's architectural history and legal heritage. My specific concern is the essential weakness in clause 62 for estate management schemes. My hon. Friend the Minister rightly values the importance of such schemes. I am sure that he will join me in wanting to see such schemes encouraged, rather than deterred.
The danger inherent in the legislation is that there is no incentive for a landlord who is getting out because he has been enfranchised, to insist on a scheme. Amendment No. 119 suggests that there would be a positive requirement for estate management schemes in specific areas of heritage value, which should be designated as such by the Secretary of State for National Heritage. That is an extremely valuable aspect to reassure those of us who are concerned about the heritage aspects of the Bill.
I underline another peculiar anomalyofEngland—cathedral closes vested in deans and chaplains. For centuries, they have been exempted from the law of mortmain. In other words, they can accumulate land and pass it on from one to another. Until recently, corporations could not do that. Their powers of mortgaging have been limited so they could not go bust or bankrupt, and their powers of leasing are still controlled by section 2 of the Ecclesiastical Leases Act 1572.
We have here an example of a unique time capsule where an urban environment has been maintained in perpetual succession to an exceptionally high standard over many centuries. One of the great disappointments of the noble gothic cathedrals of France is that they are utterly devoid of anything similar. They may be jewels in their own right, but they have been wrecked by revolution and confiscation from the social and environmental context in which they were set.
What I am suggesting to my hon. Friend the Minister is simple: we do not have a tradition—

Mr. Raynsford: What about Chartres?

Mr. Evans: Chartres is not as fine as Wells or Salisbury. The rich canons of Chartres were all despoiled at the revolution, for understandable social reasons. The dean and chapter of Barchester in England have always been beneficent.

Mr. Peter Ainsworth: Will my hon. Friend consider the plight of the abbey of Cluny in that context?

Mr. Evans: I endorse the fate of the abbey of Cluny. It was one of the tragedies of the French republic after the revolution. We have seen it from Mont St. Michel to the burial place of the Plantagenets. The revolutionaries turned their finest monuments into prisons, dungeons and casernes. That is not the English tradition.
I may have chided my hon. Friend the Minister earlier for his intellectual brutalism with the rich tapestry of the English law of leaseholds. Undoubtedly, under the legislation he has no intention of damaging heritage. The heritage issue has entered the argument only because others have raised with the Minister the question whether there may be in the context a threat which is peculiar to England and the English position.
I ask my hon. Friend to consider amendment No. 119 as a practical means not to hinder the process of enfranchisement but simply to ensure that all this takes place on proper terms so that public interest in our

heritage is protected. The only requirement of the amendment that is likely to have a practical effect is that there should be agreed an estate management scheme.

Mr. Pike: Does the hon. Gentleman accept that, if he is absolutely serious about what he is saying, it is possible that something would not be classified as a heritage area under the new clause within the period of 12 months or because the situation existed at the start and therefore could be disposed of? In five or 10 years' time, such an area may be regarded as heritage because people's views change over time.

Mr. Evans: I am sorry; I disagree entirely with the idea that permissive aesthetics is a time problem. Since the 1960s, we have seen the rise of public conscience and consciousness on the issue of heritage. In the past two decades, that consciousness reached a much higher level than it had been since 1914. I do not accept that the level of consciousness will go up and down.[Interruption.]The sedentary intervention from the Labour Front Bench and stupidity on a vital issue of national heritage is a reflection of their lack of concern to analyse the issue seriously and consider its impact. It may well be a sign of ignorance, but I shall say no more.
The point at stake is that it is feasible to set up a safeguard that the new clause introduces. The Minister may wish to reconsider the precise terms of the safeguard. I respectfully agree with the hon. Member for Burnley, and I am a little surprised that those who drafted the new clause included such a tough time limit as 12 months. I do not see why the time limit could not be extended. The new clause deals with that particular problem.
If my hon. Friend the Minister would give way on the substance of the argument for amendment No. 119, he would do so to the universal approbation of the conservation lobby, the delight of his Back Benchers and the enlightened opinion on conservation and architectural matters in the United Kingdom generally. I conclude, Mr. Deputy Speaker, on a minor matter: the Bill has forgotten Wales, and Welsh heritage should be mentioned specifically in such provisions.

Mr. Fishburn: Although I hope to catch your eye later in the debate, Mr. Deputy Speaker, on a number of amendments to widen the net of leasehold reform, as I believe that leasehold reform should be available to the maximum number of people, there is no doubt that there is something germane in the heritage argument. It depends on where we draw the line.
Since the Leasehold Reform Act 1967, there has been a tremendous improvement in the squares in my constituency where people enfranchised themselves—because they have bought their own houses, they have put money into those houses and into the squares. One of the great changes in London over the past 20 years has been that, where house owners have enfranchised themselves, they have improved whole swathes of London. That has been all too visible in Kensington and north Kensington.
However, there is a narrowly drawn argument for protecting the heritage which was persuasively put by my hon. Friend the Member for Surrey, East (Mr. Ainsworth) and those who argued for the cathedral closes. I hope that my hon. Friend the Minister will realise that, if we are confident about leasehold reform affecting the largest


number of people, we should be confident about excluding specific areas where the heritage for historical reasons would be hurt.

Sir George Young: Everyone who has spoken in the debate is united by concern for our heritage; what may divide us is the best way of achieving that objective.
I was grateful to my hon. Friend the Member for Surrey, East (Mr. Ainsworth), among others, for putting the case so plausibly. He said that he detected some gloom on the Government Front Bench and I cannot think why he reached that conclusion. Morale is high and we are enjoying a refreshing and constructive debate with our hon. Friends on the Back Benches; the only shadow is the Minister of State's voice, which is approaching the end of its lease.
About an hour ago, my hon. Friend the Member for Monmouth (Mr. Evans)called me an intellectual Jacobite. He has now called me an intellectual brutalist. It is not my objective to vandalise Britain's heritage; on the contrary. However, I detected some inconsistency in his argument. First, he argued that our heritage is safe in the hands of the interests that now own it—indeed, he said that it was safe only in their hands and could not be trusted to anyone else —but he went on to say that one could not rely on those interests to implement estate management schemes and that somehow their commitment to heritage would evaporate if they were confronted with the option of introducing an estate management scheme at no cost to themselves. Either they have our interests at heart, in which case they would implement estate management schemes, or they do not, in which case we can rely on the leaseholders.
At the heart of the debate is the point that was touched on by my hon. Friend the Member for Kensington (Mr. Fishburn)—whether the only way of safeguarding our heritage is to insist that sensitive buildings remain in single ownership or whether one can rely on the interests of leaseholders to safeguard and even enhance that heritage.
New clause 15 and amendments Nos. 1 and 2 would exempt from enfranchisement properties which the Treasury has designated under the Inheritance Tax Act 1984 as conditionally exempt from inheritance tax. There is concern that if the properties are enfranchisable there would be serious implications for some estates. The concern is first that the disposal of part of an estate could trigger a review by the Inland Revenue of the conditional exemption. In short, if the estate is being broken up, is there any case for continuing the exemption? Secondly, there is the concern voiced by my hon. Friends the Members for Weston-super-Mare (Sir J. Wiggin) and for Monmouth that the coherent management of the estate would be lost. I suspect that those issues are likely to be of greatest concern to rural estates and the example given was not in one of our cities.
Amendments Nos. 116 to 199 would exempt from the rights to enfranchise properties falling in heritage areas proposed by a new schedule—both flats and higher-value houses coming within the scope of enfranchisement under the Bill. I expect that those provisions would be of greater importance to some of the urban estates, although there might be wider application as well.
I shall now deal with the point made by my hon. Friend the Member for Surrey, East about inheritance tax. Exemption from liability to inheritance tax is, of course, a matter for my colleages at the Treasury. I understand that

it is granted in respect of outstanding historic buildings or landscapes, so that the estate does not have to be broken up in order to meet the tax liability. The exemption or designation is usually conditional on undertakings being given to maintain, repair and preserve the estate, and on public access being granted.
When there are disposals from an estate that has been or is being granted conditional exemption, the Inland Revenue will quite properly want to review whether designation remains appropriate. Enfranchisement is as much a disposal as any other sale. It will be necessary to pay any inheritance tax due on the proportion of the estate which is being sold, but that is only right, as the former freeholder will have the cash to meet the tax liability.
I turn to a point on which I may be able to help my hon. Friends. Each case will need to be examined on its merits, but I see no reason why, in general, the sale of the freehold through enfranchisement should necessarily lead to designation being removed from the rest of the estate. After all, enfranchisement can take place only where the property has already been demised by way of a long lease. My hon. Friend was concerned that disposal of one part of an estate might automatically lead to designation being removed from all of it. Of course, one would need to discuss it with the Inland Revenue, but there is no particular reason why the entire benefit of designation should be lost if any proportion of the estate were enfranchised.
The sale of a freehold will not result in the break-up of an estate in the same way as the sale of the contents of a house can separate paintings of sculpture, for example, from their context. The buildings will still be there, in the same relationship to each other, whoever owns the freehold.
Conditional exemption from inheritance tax does not prevent the freeholder from selling long leases for a premium as long as the terms of those leases are in keeping with the conditional exemption. If they are, there should be no reason why the leaseholder should not enfranchise. It would not be right for the freeholder to benefit from such sales and also benefit, at the leaseholders expense from his inability to enfranchise.
Where designation depends on standards of maintenance, or on access rights, it should be possible for the former freeholder to ensure that these obligations remain on the former leaseholder through an estate management scheme. I shall say more about that later.
Amendments Nos. 116 to 119 would provide a much wider exemption covering areas which my right hon. Friend the Secretary of State for National Heritage would be required to designate as heritage areas. Designation would apply if an area is within a conservation area and is of outstanding architectural or historical interest. The suggestion is that these areas can be effectively managed and will retain their architectural and historical merit only if the existing leasehold arrangements are left unchanged. That cuts right across our desire to keep exemption from leasehold enfranchisement to an absolute minimum and keeping them on the face of the Bill. It could drive a coach and horses through the Bill, giving the Secretary of State, for National Heritage the power to exempt any properties he sees fit.
I wish to make two preliminary points. First, it is possible to have areas of fine architecture or historical interest without the leasehold system. One has only to look at Paris or Edinburgh to see evidence of that. There are


other means by which standards can be maintained. Listed building control and the designation of conservation areas spring to mind. If those need strengthening, that would be a separate issue.
Secondly, times can change. I suspect that some of the opposition to enfranchisement when it was debated in 1967 was on the basis that the break-up of the London estates would prevent redevelopment, rather than that it would harm the heritage. I do not want to dwell too long on this point, other than to observe that the Leasehold Enfranchisement Association has circulated to hon. Members press cuttings concerning the demolition of a number of London squares by one of the great estates earlier this century.
However, the key issue is whether it is necessary that estates should continue in single ownership if they are to be managed effectively and leaseholders be denied the right to enfranchise. I do not accept that, as a general proposition, landlords are necessarily better at management or more likely to care for and preserve a historic building than the leaseholder who lives in it. There are many cases, as my hon. Friend the Member for Kensington said, in which leaseholders have restored and cherished historic buildings on an estate, often with their own resources and perhaps to a higher standard than the freeholder would have done.
Indeed, it has been argued that the leasehold system acts against the proper care and maintenance of property. If a leaseholder of a house knows that he has only a short-term and diminishing interest, he clearly has less incentive to plan for the long-term care of the property.
8.30 pm
I believe that our proposals on estate management schemes are the answer to the problems mentioned by my hon. Friends. Our proposals will allow the freeholder to continue to exercise influence over the use, maintenance and redevelopment of property, even though the leaseholder has enfranchised. Provided that they meet the conditions set out in clauses 62 and 63, there is no reason why freeholders should not apply for such schemes to cover their estates.
Estate management schemes are intended to allow the landlord to retain powers of management over houses or flats which become enfranchised. The terms of an estate management scheme can deal with the redevelopment, use or appearance of the property. They can empower the landlord to carry out work to maintain or repair properties. They can impose obligations in respect of property used in common.
More than 100 estate management scheme applications were approved after the 1967 Act was passed. I believe that they have been effective in areas such as Dulwich and Hampstead in preserving the quality of the area. For example, there is a scheme in operation in Belgravia, where several houses have enfranchised under the existing Act but are generally indistinguishable from other houses in the street which have remained under the control of the original landlord.
Leasehold valuation tribunals will have to approve estate management schemes and consider the reasonableness of what is proposed. In considering applications, they will have regard to the past development and present character of an area and to architectural and historical

considerations, as well as to the circumstances generally. Such schemes are likely to enhance historic areas and cathedral closes, which were mentioned so movingly by my hon. Friend the Member for Monmouth. We are also considering suggestions to amend our proposals, and we are in consultation with local authority associations with a view to giving local authorities the power to promote estate management schemes.
It would not be right to frame exemption from enfranchisement in terms of the application of tax law. Leaseholders' rights should not depend on the taxation circumstances of the freeholder. Nor is it necessary that those who live on the great estates need be denied the chance to own their freehold. The Government's view is that leaseholders are fully capable of caring for the buildings in which they live and that the system of estate management schemes provides adequate safeguards where in the general interest there must be coherent management of an area as a whole.

Sir Jerry Wiggin: I realise that my hon. Friend is coming to a conclusion, but nothing has been said about the attitude of English Heritage to the Bill and the effects that it might have on heritage areas. Rumour has it that English Heritage has a strong view that the Bill will be damaging for the heritage but was firmly told by the Department that it was one of the Department's agencies and should behave itself. Perhaps my hon. Friend could clarify the position.

Sir George Young: When my hon. Friend the Member for Surrey, East moved his new clause, he said that he had been in contact with English Heritage, so it is legitimate to assume that he articulated some of the points that English Heritage had made to him. The Government's view is the one that I have just set out. We do not believe that the only way to safeguard our national heritage is to grant the exemptions. We believe that there are other ways of achieving the goal that we all share.

Mr. Pike: The Minister said that there would be some consultation with local authorities about management schemes. There is no reason why English Heritage could not also be involved in that discussion. Will the Minister assure us that it will be involved? We support the concept of estate management schemes and the widest possible discussion on them.

Sir George Young: I do not believe that English Heritage is pressing for those powers at this stage. The local authority might be involved if, for the sake of argument—this would be an exception—neither the existing freeholder nor the new freeholder wanted to promote an estate management scheme. It might then be sensible for the local authority to be able to do so. That would be a case of last resort. The estate management scheme costs the freeholder nothing because the costs are recouped through the leaseholders.
If the freeholder had a continuing commitment to the country's heritage, it would be odd if he failed to promote an estate management scheme, especially if he did not have to fund it. We are considering the possibility of a safety net. We are talking to local authorities about whether they would welcome such a power if, in unusual circumstances, no one else was interested in promoting a scheme. I hope that the House will not feel it necessary to press the new clause to a Division.

Mr. Ainsworth: I was clearly mistaken earlier when I saw furrowed brows on the Government's Front Bench and took them to betoken gloom. They clearly betokened pensiveness. I am grateful to my hon. Friend the Minister for his thoughtful response to the new clause and amendments. In view of the words that he has just spoken and the undertakings that he has given, in the hope that he will continue to liaise with both the Department of National Heritage—it is good to see my hon. Friend the Under-Secretary of State for National Heritage in his place listening to the debate—and with the Treasury—it was good to see my right hon. Friend the Chancellor of the Exchequer listening to the debate, too—and so that I may see what further progress can be made in safeguarding heritage buildings in the context of the provisions of the Bill, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 18

ABOLITION OF LOW RENT TEST FOR HOUSES

`.—(1) In section 1(1)(a) of the Leasehold Reform Act 1967 the words "at a low rent" shall be omitted.

(2) Section 4 of the Leasehold Reform Act 1967 shall cease to have effect.'.—[Mr. Pike.]

Brought up, and read the First time.

Mr. Pike: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): I understand that it will be convenient to discuss also the following amendments: No. 22, in clause 5, page 5, line 40, leave out 'at a low rent'.

No. 120, in clause 7, page 8, line 16, leave out from 'exceed' to end of line 29 and insert '£250'.

No. 100, in page 8, line 16, leave out from
'namely—' to end of line 29 and insert—

'(a) £250, or
(b) one-third of the market rent on the relevant: date.'.

No. 23, in page 8, line 17, leave out 'two thirds of and insert 'one and a half.

No. 24, in page 8, line 26, leave out 'two thirds of' and insert 'one and a half times'.

No. 121, leave out lines 34 to 36.

No. 122, leave out lines 6 to 15.

No. 114, in clause 59, page 63, line 25, leave out from beginning to end of line 47 on page 64.

No. 123, page 63, line 36, leave out from beginning to end of line 37 on page 64.

No. 124, in clause 60, page 63, line 45, leave out from beginning to end of line 37 on page 64 and insert—

'Alternative rent limits for purposes of section 1A(2)

4AS.—(1) For the purposes of section 1A(2) above a tenancy of any property falls within this subsection if at any time during the tenancy either:

(a) No rent is payable under it; or
(b) The rent so payable does not exceed the maximum limit.

(2) The maximum limit is:

(a) Two thirds of the annual letting value of the property (on the same terms) on the date of the commencement of the tenancy; or
(b) If greater than (a), two thirds of the fixed amount (if any) of the rental applicable to the property.

(3) The fixed amount applicable to any property is:

(a) The rateable value of the property on the relevant day where either—

(i) The tenancy was entered into on or after 1st April 1963 but before 1st April 1990; or

(ii) The property has a rateable value on 31st March 1990 and the tenancy was entered into on or after 1st April 1990 but in pursuance of a contract made before that date.

(b) In any other case £5,000 if the property is in Greater London and £1,000 if elsewhere.

(4) Where the property comprised in the tenancy includes property other than the house and premises:

(a) The rent payable under the tenancy shall be deemed to be that part of the rent which is fairly attributable to the house and premises;
(b) The rateable value shall be taken to be that part of that value which is fairly attributable to the house and premises; and
(c) The letting value of the property at any time shall be taken to be the letting value of the house and premises at that time.

(5) It shall be presumed that the rent payable under a tenancy does not exceed the maximum unless the contrary is proved.".'.

No. 125, in page 64, line 20, leave out from beginning to end of line 22.

Mr. Pike: The new clause and amendments all deal with the low rent test. We hope to get a more positive response from the Government tonight on the matter. Opposition Members are disappointed that the Government have not tabled an amendment to take some action on the problem. We are not alone in that view. Several of the amendments in the group were tabled by Conservative Members. Unless we get a positive response from the Minister and an assurance that the Government will take action, we shall press new clause 18 to a Division. I make that clear in case there are any doubts or misunderstandings, so that people know where they are. I am aware that other amendments in the group may be moved formally at the appropriate stage and pressed to a Division. We intend to test the feeling of the House on the lead new clause 18.
In Committee, the Under-Secretary of State said:
but we are perfectly prepared to reconsider where that low rent test should bite."—[Offical Report, Standing Committee B, 17 November 1992; c. 104.]
That was on 17 November. We are now three months on. It would be an understatement to say that we were disappointed that the Government had not tabled an amendment to change the position.
It comes down to the type of principle we have been trying to debate. We believe that people should be able to get the enfranchisement provided for in the Bill and that there should not be provisions in the Bill that prevent that. Some hon. Members have tried to take us further back the other way and to preclude more people from being able to exercise enfranchisement. We have seen the Government fighting fairly hard, but being squeezed, to try to hold the position as near as possible and to make the minimum concessions.
If the Government are serious about what they said, that one of the fundamental objectives of the Bill is to ensure that as many people as possible should have the right to enfranchise, they must recognise that this low rent test puts an obstacle in the way of many people who wish to enfranchise. That would be totally wrong and inconsistent with what the Government say that they are trying to do. So we hope that the Government can rethink this and try to respond positively.
In the debate on new clause 15, the Minister repeatedly said that it was not his wish to see people precluded from owning their own properties. He was extolling the virtues of that and of being able to acquire the freehold. Those are very much the views that we are advocating in this debate.
We move the new clause very much in that spirit, because we want to see people able to exercise their right to enfranchise and not be excluded by a test that will exclude more people than it ought to.
This is a matter of great concern, particularly in the London area. It will be of great concern to many people, who will see their opportunity to acquire freehold barred by a Bill which, when it was foreshadowed in the Queen's Speech, made them think that at long last the Government were to take action. They thought they were going to have the right to acquire a freehold, and now they see that the Bill, at its last stage in this House before going to the other place, still has a bar to stop many people exercising a right to acquire freehold. That would be an unfortunate situation.
In the Lord Chancellor's consultative paper on commonhold, published in November 1990, in paragraph 4:11 there is a reference to the low rent test:
It is so unlikely that there is a significant number of cases of residential long leases at a full rent suitable for conversion to commonhold, that the complication of a low rent qualification cannot be justified bearing in mind, especially, that special provision would have to be made to deal with cases where some leases were at a low rent and others were not".
Now there seems to have been a shift in the Government view. I do not want to get involved in the commonhold issue, because, Mr. Deputy Speaker, you would immediately rule me out of order. We all wait for the day when the Government can introduce that legislation. Members on both sides of the House have actively campaigned for the commonhold principle to be established. We regret that it is not possible to do it this year and hope that it can be done next year.
8.45 pm
In the first part of this Bill, we have a low rent test, which will remain unless we carry this new clause or one of these amendments and will bar many people from exercising the very principle that the first part of the Bill claims to set out to achieve for occupiers of these properties.
I want to refer to one or two examples of people who know how serious it is. I know that many hon. Members who were on the Committee have had letters on the subject, but it is relevant to refer to some in the context of this debate, because they highlight how crucial is the low rent test and how easy it has often been to ensure that the levels of ground rent have been fixed at a figure that would bar people from being able to exercise their right to acquire freehold.
A Mr. Dyson wrote:
This anomaly is the 'low rent' provision which states that to qualify for enfranchisement leaseholders must have rents which are less than⅔rateable value on grant of lease or if lease issued after April 1990, rent must be less than £1,000 in London or £250 elsewhere. This rule currently applies to houses (1967 Leasehold Reform Act)".
It then says just how this would bar him in the present situuation from acquiring the property. The ground rent at the start of the lease was £230 per annum and rateable value at the start of the lease was £338. Two thirds of £338 is £226, so for the sake of £4 that individual is barred from exercising his right of enfranchisement. That is the present situation with that house and it will apply if we do not do something to abolish the low rent test or amend it to

ensure that such people are not barred. If the ground rent of £230 had been just £4 lower, he would have qualified, and that must be nonsense.
Another letter, from a T. J. 0. Hickey, refers to the two-thirds rule and says that it means that in order to qualify for enfranchisement or extension of a long lease over 21 years there must be a ground rent of less than two thirds of rateable value at the time that lease was granted. He says that the premium charged by the landlord for the lease in 1984 in this case was very close to the market value of the freehold. The rent was fixed at £280 a year in order to be above two thirds of the then rateable value, in this case by £5.
That individual believes that that was clearly done under the legislation of that time to make sure that it was just above the crucial figure. The market rent, the rack rent, would have been much greater, and plainly this tenure was closer to ownership than to renting. I think that the Minister would say that the intention of this sort of legislation is to ensure that such people are not barred. I do not believe that it is the Government's intention to bar that individual from acquiring the freehold and being able to enfranchise. I do not believe that that is what the Government want, but they fail to recognise the genuine difficulty. Even at this late stage, if they recognised that and did something, they could solve this problem.
I received another letter, after we debated the matter in Committee. It was expressing disappointment that the Committee had not been able to see a positive end to the low rent test and that the Government had not been prepared to accept any of the amendments or options that were debated in the Committee.
The letter stated:
As you can imagine, I am deeply concerned that legislation supposedly designed to assist leaseholders might paradoxically destroy the value of their homes, in most cases their principal asset.
I am sure that the Minister would not suggest for a moment that the low rent test was intended to prevent enfranchisement, or to devalue properties. If the Bill is not changed, however, such side issues will be bound to arise.
Members of the Standing Committee received many useful briefings from the Leasehold Enfranchisement Association, which deals with many of the people affected by the current problems, and which hopes that most if not all will be able to enfranchise when the Bill is enacted. It hopes for a leasehold extension for those who cannot do so. The association is extremely concerned about the low rent test. In a briefing note sent to us in November, it said:
Finally, we would like to draw attention to paragraph 6 of the enclosed note which indicates that the Price Waterhouse/Caws and Morris Report"—
a report that we debated, and which was referred to several times in Committee—
demonstrates that in 1989 Central London properties would have frequently failed to clear the proposed low rent' barrier even if their ground rents had been fixed at no more than 5 to 10 per cent. of the potential rack rent of the property concerned. Such ground rents would have had relatively little effect on the premium paid, but would, under the Government's present proposals, nevertheless render the property unenfranchiseable. If the retention of some form of low rent' test is, for whatever reason, deemed necessary, it must, therefore, we suggest, be formulated in a way which leads to the barriers being placed at far higher levels which genuinely approach the attainable rack rent for each property concerned.
I know that hon. Members on both sides of the House want to speak in this important debate. Let me make it


clear, however, that Opposition Members solidly believe that the low rent test needs to be either changed or abolished. A number of Conservative Members also believe that the Government are wrong in this instance, and I know that they, like me, hope that the Minister will say that the Government are prepared to table an amendment in the other place at an appropriate stage, even if nothing can be done now.
If the Minister cannot give that undertaking, we shall have to try to force a vote with the intention of defeating the Government. If we do that, the Government will have to recognise the overwhelming concern expressed by hon. Members. That concern is not unique to the House of Commons; it is felt by the very people whom, according to the Government, the Bill is designed to help. If the Government want those people to be enfranchised, they must think again, even at this late stage. Unless they change the low rent test, many people will be barred, and the finger of blame will be pointed where it should be pointed—at the Department of the Environment, and at Ministers who must accept responsibility for not being persuaded by an overwhelming case. Our case is that the test is wrong, and that it needs to be changed as quickly as possible.

Sir John Wheeler: I am very pleased to follow the hon. Member for Burnley (Mr. Pike), who spoke in a non-partisan way about an issue that concerns hon. Members on both sides of the House. I agreed strongly with almost everything he said until his closing words.
I know that my right hon. and hon. Friends at the Department of the Environment have received a great deal of correspondence from Conservative Members—including me—over many years. They have treated that correspondence, and the arguments contained in it, with great courtesy, and I am very grateful to them. Whatever the House decides tonight will not reflect in any way on my hon. Friend the Minister, or on his officials, who have had to deal with the matter for so long.
I strongly support reform of the low rent test. I have never been convinced of the need for any such test. It is very telling that, when the matter was examined in detail in Committee—as the hon. Member for Burnley pointed out—a good many Conservative Members were so unimpressed by the justifications advanced for the clause that my hon. Friend the Minister was forced to reconsider. It is disappointing to discover now that my right hon. and hon. Friends have been unable to accept an amendment that reflects the widely held and genuine concerns of my constituents and many others.
I remain unimpressed by any of the arguments—such as they are—that have been used to defend the low rent test. Recently, my right hon. and learned Friend the Secretary of State wrote to me, drawing attention to the importance of the private rented sector. He did not want that sector to be damaged by acceptance of the amendments. I see a great difference between encouraging the private rented sector and what the amendments seek to achieve; I see no conflict.
We are told that a low rent test is needed to verify that a leaseholder has purchased a genuine long lease—that is, one of over 21 years for which a premium has been paid. The purpose of the test is to distinguish such leases from those of over 21 years for which no premium has been paid, and for which a market rent is charged. No one—not

even my hon. Friend the Minister—has been able to find an example of the latter category. The low rent test is there to address circumstances that simply do not exist.
Even the Lord Chancellor recognised that in his much-quoted circular on commonhold, which was mentioned earlier. Later in this Parliament, a substantial commonhold Bill will be presented; the issue will return to the House if we do not address it now.
We are told that the low rent test remains because it existed in earlier legislation. But surely, the main function of new legislation is to improve the old statutes. We are not good legislators if we carry forward into the new obvious mistakes from the old.
We are also told that people knew about the low rent test when the agreement was made to purchase a lease. Therein lies the greatest reason for looking again at the low rent test. Many individuals buying long leases had no idea of the wider significance of the ground rent level. That is made clear time and again in the correspondence that most of us have received. People feel cheated.
Consider, for those buying a long lease in my constituency—in, say, St. John's Wood—the difference between a ground rent of £1,000 and £1,010. It may seem only £10, but to the freeholder, with his expensive lawyers well versed in property law, the difference is not just in £10. It is the difference between enfranchisement and disfranchisement. They know that and they use the low rent test to get around the spirit of any leasehold-reforming legislation. Such legislation has been around since 1967, so the inevitable march of reform has been going on a long time.
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Not only is the individual leaseholder disfranchised, but, by manipulating the low rent test for new leaseholders, freeholders can disfranchise others in the block who meet all the stated criteria. Under the Bill, at least two thirds of a block must be enfranchiseable. So in a block of, say, four or five flats—typical in my constituency; such blocks make up the bulk of leasehold units—a freeholder need only ensure that one flat fails the low rent test effectively to disfranchise all the rest. Do we intend that to be the effect of this legislation? That loophole should be closed once for all; otherwise, it will be a constant cause of discontent and will return to haunt us.
If the Government insist on having a low rent test, it must be realistic and less open to abuse. The current low rent tests relate to a series of values all of which are out of date. How can we justify a test which depends on a comparison with rating valuations from the 1960s and 1970s, especially as we have abandoned the rating system?
Many of the amendments attempt to address that issue. I am not given to voting against the Government, but there comes a time when the duty to one's constituents' on an issue of this kind overrides the commitmente of support to the Government, whom I sincerely and honourably support. If the House divides on the issue tonight, I shall vote for my constituents' interests and in favour of the new clause.

Ms. Glenda Jackson: It is again a pleasure to follow the right hon. Member for Westminster, North (Sir J. Wheeler) and to endorse wholeheartedly everything he said. I particularly support his plea that we view the clause without party political bias.
It is clear from correspondence that hon. Members in all parts of the House have received directly and from the invaluable briefing documents of the Leasehold Reform Co-ordinatinğ Committee and its contingent six organisations that the part of the Bill with which we are dealing strikes at the very basis of the measure and, in a sense, at the authority of the House.
I say that because the legislation is designed to move forward the whole process of leasehold reform, yet, time and again, constituents and groups have written to us saying that they believe—they are correct in their belief —that their freeholder has deliberately set their ground rent at a level which debars them from enfranchisement.
In every case, the leaseholder has spent much money on the fabric of the property, carrying out essential repairs. We are not talking about a new coat of paint. I have received letters from constituents—admittedly, the initial price of the property may have been low—telling how they have replaced a roof, done work on the foundations of the property and replaced windows, long before dealing with paper and paint on the walls. They have believed, and I agree with them, that they owned their property. The low rent provision denies them that right in the eyes of the law. Tonight the House has an opportunity to free them from this injustice.
I have referred to the invaluable briefings that we have received from the Leasehold Reform Co-ordinating Committee. Its view is that
the low rent test is particularly iniquitous … what is clear, however, is that if the low rent test remains at the levels proposed, a number of house and flat-owners who are in every sense the owners of their homes will be unfairly and arbitrarily excluded from the legislation.
I have letters from householders who confirm that statement. One asks us to stress the need for the low rent provision to be set at a more realistic figure for London than the current £1,000 a year. The couple in question
purchased a 62 year lease on these premises from the Grosvenor estate, in an area where freeholds are rare. We paid a substantial capital premium to the freeholder … as we have responsibility for the repair, maintenance, insurance and all other long-term occupiers' responsibilities: but we are denied the long-term capital growth … The property was neglected by the freeholder, and we have spent £70,000 on capital works".
Referring to a new clause that we discussed earlier, the couple say:
Maintaining the fabric of an estate is easy if it is always at someone else's expense.
The whole heritage of the part of London and the estate in which the couple lived depended on who lived there —I cannot say the householders, because that is what we are arguing about tonight—being committed to their homes. Indeed, the couple state:
The proposed bill is not stealing properties from the great estates.
Another letter runs as follows:
The low rent clause means we do not currently have the right to enfranchise … the lease was of course structured this way to exclude us from enfranchisement rights.
The writer of the letter
is amused when I hear the argument that freeholders are the guardians of the heritage".
The couple in question received only one cursory visit from their estate representative in eight years.
There are more letters in the same vein. I know that hon. Members on both sides are anxious to speak in this

debate, so I will only repeat that we have an opportunity tonight to free the many people who have lavished not only money but love, dedication and time on their homes. We are sometimes in danger of examining the proposals in the Bill solely in terms of bricks and mortar, but it should not be forgotten that what we are discussing are family homes. It should be part of the duty of the House to preserve them.

Mr. Fishburn: The early part of today's debate was very much taken over by a number of my right hon. Friends who are truly the heavyweights of our party—but now they have left, leaving the Floor to the true voice of those who believe in leasehold reform. Gone are the august but distant Members for the shires: left in the House are those of us who live in the heart of London and other areas such as Eastbourne where we know all too well the problems of leasehold law.
I begin by contratulating Ministers on holding the line so well during the first part of this debate. I should not like the absent Secretary of State to think that the relative silence of those of us who have campaigned for so long for leasehold reform meant that we agreed with the august heavyweights. The Minister knows as well as I do that the rules of the House make it difficult for junior Members to speak early in a debate.
Ministers have stuck to their manifesto commitment. they have stuck by the Second Reading vote; most importantly, they have stuck by the Standing Committee that deliberated over the Bill for the past three months. In that Standing Committee the Government first realised that the overwhelming majority of us were in favour of abolishing the low rent test and that is why we tabled the amendment—not least because the Government promised to tell us their view of its abolition at this stage.
Let there be no misunderstanding: a majority of the Standing Committee were in favour of doing away with the test altogether, which is not surprising. Nor is it surprising that the Lord Chancellor—who has much to his credit, not least that he is a Scot and has not been used to the absurdities of leasehold law—echoed that opinion in his paper on commonhold, saying that there is no locus or purpose in a low rent test and that it is inherently bogus.
My right hon. and learned Friend the Secretary of State knows as well as the Lord Chancellor and the Standing Committee that the provisions of the low rent test are bogus. They are a fig leaf to hide the private parts of a few estates and are truly without any tradition in English law. They have been inserted in the Bill artificially, to restrict the number of people who can benefit from leasehold enfranchisement.
The Secretary of State's most legitimate defence is, "We've got to get this Bill through Parliament." I wholly understand that. A political balancing act is taking place. The low rent test has no real significance or legal purpose and it is a case of, "You understand, Dudley, we have to get this through, we must restrict the number of people who can enfranchise so as to buy off those who oppose the Bill." That is politics and it is why the Secretary of State is such an august politician.
The Secretary of State is right that he has to make that balance, but he would be wrong to reject amendments that do away with the low rent test. As my right hon. Friend the Member for Westminster. North (Sir J. Wheeler) said, unless we get this right tonight it will come back to haunt us when commonhold returns to the House and when the


next manifestos of the Conservative party and the Opposition are written. I am sure that my hon. Friend the Minister does not wish to find himself going through these arguments again in 1994, 1995 and 1996 and nor do I.
The Secretary of State would also be wrong politically to hold on to the low rent test, because although he would perhaps reduce the criticism from certain quarters, whose absence we have noted, he would disfranchise tens of thousands of people—articulate, middle-class Tories who have paid mightily for long leases, usually in the heart of London and in many towns and cities on the south coast. I see my hon. Friend the Member for Eastbourne (Mr. Waterson) in his place. Those people will feel increased resentment that a Bill has gone out of its way to disfranchise them and that much effort has gone into saying, "You can't enjoy the enfranchisement proposals that we are offering to others."
That is not the Conservative way. Those of us who have been fighting for leasehold reform for a long time—many people have fought for it far longer than I— have been doing so because we believe that leasehold as a form of tenure is wrong.
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We have seen it not as a form of tenancy, but as a form of ownership. People who are disbarred from enfranchising themselves by the low rent test are as fully owners of their long leases as anybody else in the land. We run the risk in classless Britain of listening to the very rich in order to disfranchise those who are middle class.
The low rent test is wrong for another reason. It is a bogus formula based on rateable value. Rateable value when were those words last heard in the House? I can recall the Secretary of State coming to my by-election in 1988 and saying, "We will do away with all these rates; rateable value is a thing of the past; an unsatisfactory way of raising local taxes." And he produced out of the hat the poll tax. Three years later, he produced out of the hat the council tax. That is fine and good, but rateable value, with each and every new local tax, recedes into the dim distance of London's history.
Yet this Bill has written throughout it a number of clauses which refer to rateable values as far back as 30 years ago, and does that specifically to disfranchise a number of people, principally in London, but also throughout the country. It cannot, and does not, make sense.
As if the reference to rateable value were not enough, we are told that certain leases that have ground rents of over £1,000 a year should not be able to qualify for enfranchisement. Yet, for an enormously expensive flat costing, say, £1 million, a ground rent of £1,000 stands in the same proportion as does a ground rent of £100 for a flat worth £100,000. Unless we are careful, under this Government it will be the rule that the more one pays, the fewer rights one has. That is not a good principle on which to go forward.
The low rent test is perhaps most pernicious for the reason that my right hon. Friend the Member for Westminster, North gave—its knock-on effect, or multiplier. Take a block of flats, disfranchise two or three people, and is it really possible to imagine that the rest of the leaseholders in that block will be able to get the two thirds that is necessary to qualify for leasehold enfranchisement?

Those who will feel resentment at this exclusion will not just be those who are excluded, but the much wider pool—that is why I number them in tens of thousands who— will not be able to enfranchise themselves because certain flats in their block are disregarded by the law since they fail the low rent test.
In effect, whole swathes of London will be disfranchised and whole armies of Tory voters will feel let down. Worse than that, as the years advance it will open up a two-tier market in London and the towns in the south, which rely so heavily on leasehold reform. Some properties will be enfranchised and will then perhaps convert to common-hold. They can be sold in perpetuity and their owners can raise money on them from building societies and can afford to invest in and improve their premises, to give them that new lick of paint, or put in those new rolled steel joists which are so necessary. Those that are enfranchised will be able to market at a premium; those that are disfranchised by this provision and its knock-on effect will be unable to do so. Their properties, as their leases dwindle in years, will become less saleable. The blight that was so apparent in my constituency 15 to 20 years ago before the Leasehold Reform Act 1967 began to motor will again be apparent in the centre of our capital city. It is that which will come back to haunt us.
The low rent provision is wrong because it is intellectually dishonest. A long lease is a long lease, a rental agreement is a rental agreement, and never the twain shall meet. They do not meet because of some reference to a rateable value or because of an arbitrary figure plucked out of the sky. They are two different animals and there is no cross-over point. That is the joy and clarity of English law. A leasehold of over 21 years has been held under English law to be equal in many aspects to a freehold. It was held in the 1967 Act to be the trigger point at which people could enfranchise. No one—not some people, but no one in the capital city can be found who undertakes a 21–year rental agreement for which he is also prepared to pay a capital sum in advance.
As my right hon. Friend the Member for Westminster, North said, the provision addresses a problem which does not exist, but we know why it is in the Bill. It is there because it addresses a problem that does exist—the need for the Front Bench and the Government to do a balancing act betwen the restrictions demanded by certain interests and the full enfranchisement measure that is demanded by the people of London and those who live under the misery of leasehold law.
I end with a warning. There is an indication of which the party should be aware: the Labour party is slowly letting loose its old chains to the established interests that bound it to electoral disaster time after time. The block vote is going; trade union influence is going; clause IV is going. Yet the Government, after a radical decade, risk slipping back through this legislation into the arms of established interests rather than going forward with radical reform. For that reason and for the reasons which I have outlined I shall join my right hon. Friend the Member for Westminster, North in pushing the amendment to a Division.

Mr. John Denham: That was an excellent speech by the hon. Member for Kensington (Mr. Fishburn). I doubt whether I can follow its quality. He spoke so persuasively about the impact of the low-rent test on Conservative voters that I am slightly undecided about


whether I wish to see success or failure in the Division Lobby. Perhaps it would be better if some of us from the Opposition Benches absented ourselves.
Obviously the House should do what is right and not what is to party advantage. What I heard in the excellent speeches of the three hon. Members who preceded me was hon. Members speaking genuinely in the interests of their constituents whom they have taken the time and trouble to meet and correspond with; they have studied the cases put in front of them and have realised that the low-rent test must go if the interests of their constituents are to be met. The Government should conclude from the comments already made that they can only emerge with credit if they listen to the voice of the House on the issue.
It is agreed across the Chamber, as it was in Committee, that to seek to extend a right such as leasehold enfranchisement is good and proper. We have debated whether the mechanism of commonhold is the better way of doing it, but it was agreed that the right should be extended.
It was also accepted in principle by both sides in Committee that if the right were to be extended, there would be some circumstances in which restrictions would have to be applied. There was no suggestion by either side in Committee that tenants should simply be able to confiscate their landlords' property, although we had debates about the appropriate valuation to be put on enfranchisement.
There was no disagreement about the principle that some limit on qualifying tenancies was necessary, although there was a debate on the number and the types of properties. It was accepted that some restrictions would be necessary to make enfranchisement workable and fair. But if the Government are to impose a restriction, it is essential that it is seen to be just, fair and easily understandable by those to whom it will apply.
We are talking about people's homes, in which they have invested thousands of pounds on their own behalf and been required to invest thousands on their landlord's behalf. They read press reports and the Government's earlier statements and expected and hoped to be able to free themselves from neglectful landlords. A leaseholder whose right to enfranchisement is to be restricted has a right to an assurance that those restrictions are fair, just and understandable.
The problem with the low rent test is that people will not regard it as fair, just or understandable. They will see it as an arbitrary measure which the Government introduced for no intellectually honest or good reason but which has enormous implications for their lives and futures as leaseholders and, as they regard themselves, the real owners of their property. They will find three entirely different bases for calculating low rent in the Bill, which apparently are arbitrarily set according to the date on which they took on their lease. Experts in housing law will be able to identify exactly why there is one test before 1963, another test after 1963 and another more recent test, but to any ordinary person those different tests will seem quite arbitrary. As the right hon. Member for Westminster, North (Sir J. Wheeler) said, the Bill is an opportunity not to reaffirm previous housing legislation but to establish a fairer basis for enfranchisement. That is what we should be doing.
I well remember our debates in Committee and the Lord Chancellor's arguments against a low rent test. I do not recall a convincing case being advanced that the low rent test would operate in the interests of people seeking the right of enfranchisement. I understand the argument hangs on the issue of needing a distinction between renting and genuine leasehold, where people are, to all intents and purposes and in their own minds, purchasing their own property.
Is there really any practical possibility of someone who thought that they were renting a property finding out that they have a right to enfranchisement and then demanding to exercise it? I simply do not believe that. We could search the streets of London and knock on the doors of leasehold properties but fail to find anyone who thought that they were renting property only to find that under this law they had the right to enfranchisement. I do not believe that that problem exists. Even if it did, it could exist only in a tiny number of cases. If there were some unfairness in those people getting a right to enfranchisement, the injustice that might be done would be nothing compared with the injustice that will be done to thousands of people by the low rent test.
I fear that the low rent test is included in the Bill as a result of the concerted lobbying which was widely reported outside the House, although it was not especially evident in Committee. We rarely heard the views of the landlords' lobby in Committee, but I believe that the low rent test is included as a result of lobbying by big interests against the interests of ordinary people who happen to be leaseholders. It is a crucial test of the willingness of the House to stand up to such a lobbying exercise, such backroom or corridor lobbying and influence peddling, and to stand up for the interests of leaseholders who want the right to enfranchisement.
I hope that before too long the House will remove the low rent test from the legislation.

Mr. Waterson: My starting point is that the Bill is bold and far-sighted. It will benefit thousands of leaseholders not only in my constituency but throughout England and Wales. It is precisely because I take such an enthusiastic view of this aspect of the Government's legislative programme that I want as many people as possible to benefit from it.
I echo the two excellent and memorable speeches made by my right hon. Friend the Member for Westminster, North (Sir J. Wheeler) and my hon. Friend the Member for Kensington (Mr. Fishburn). I mean no disrespect to Opposition Members by paying particular attention to my right hon. and hon. Friends' remarks.
I strongly support the amendments that I and my hon. Friends have tabled. Like many colleagues who were members of the Committee, I was unconvinced by the justification for the low rent test, and I remain unconvinced. We have heard how pressure was put on the Government during the Committee to reconsider the problem, and I share the feeling of disappointment that we are still discussing this version of clause 7. Certainly, nothing has been said today or in Committee to convince me that we need a low rent test. There is no practical reason for it.
As we have heard, the test is not needed to distinguish between long and short leases. The test for that is the


number of years of the lease—if it is more than 21 years, it is by definition a long lease, and if it is fewer than 21, it is a short lease. The test is not needed to differentiate between premium long leases, which have a token ground rent, and long leases with a market rent. It is not needed because, simply, there are no properties with long leases and market rents.
I shall not weary the House by being the third or fourth hon. Member to quote the Lord Chancellor's now memorable report of November 1990, save to repeat that it underlines the argument, with which I agree, that the low rent test seems to be aiming at a non-existent problem.
The effect of the low rent test is to give freeholders—present and future—a simple means of circumnavigating the legislation. It is so easy. The proposed low rent threshold is so low, and there are numerous examples of ground rents being set by freeholders at just a few pounds above that level. We have heard some examples of that today.
What are the results? The freeholder wins in two ways. First, the leaseholder, having paid a premium for his lease, discovers that the smart freeholder has set the ground rent that little bit higher and that he is therefore disfranchised. We know that that will happen because history tells us so. We need only consider the leasehold houses in Hackney and Islington where the leaseholders cannot enfranchise under the Leasehold Reform Act 1967 because the freeholder has set the ground rent just a couple of pounds higher than the official low rent level. That has been done deliberately to get around the Act. All that the low rent test will do is to produce anomalous results, especially in London. We have all had letters from leaseholders, especially in central London, who are deeply concerned about the effect of the test.
Even better from the freeholder's point of view is the fact that he can use the loophole to disenfranchise whole blocks at one go. He has only to apply a rent slightly above the low rent level in a small proportion of flats in a block and he has effectively made it impossible for the others to enfranchise. They will simply not be able to meet the two-thirds hurdle which is necessary to be able to enfranchise under the Bill. That is a wonderful loophole for a landlord. Having seen the extent to which landlords have been prepared to go to scupper the Bill in Parliament, who can doubt that they will seize on the low rent test as a simple way in which to get round the legislation?
Ideally, I should like the whole concept of a low rent test to go. It serves no practical purpose except to give landlords a way out. If for some reason it is left and we have to have a low rent test of some sort, we should at least make it a realistic test. For many leasehold properties, the low rent test is a factor of their rateable values. Surely it is wrong to pass new legislation that is based on historic and outdated rating levels when the rates themselves have already been abolished. There is deep concern that the low rent test will lead to the exclusion of genuine leasehold flats which have low rateable values which date back to 1973, but whose ground rents rose dramatically in the late 1980s as a result of the property boom.
The Bill gives us the opportunity to clear up that anachronism if the new clause is accepted. By linking the low rent test to current market levels, we shall have a system that satisfies the Government because it retains a low rent test and satisfies everyone else because it blocks the obvious loopholes. I very much hope that the

Government will accept the amendments. I regret to say that if they do not, they are unlikely to enjoy my support in the Lobby this evening.

Mr. Raynsford: This has been a fascinating debate, because there has been unanimity among speakers of all parties so far. That unanimity should give a clear warning to the Government that they would be foolish to proceed on the basis of trying to get the low rent test incorporated in the Bill.
The case is strong, and it has been argued persuasively and forcefully by a number of hon. Members this evening. There is no need for the low rent test and if it is imposed, it will create serious anomalies. Those anomalies will be exploited by people who seek to obstruct leaseholders who would otherwise be entitled to enfranchise and will thus deny the opportunity of enfranchisement to a substantial number of leaseholders. The test would therefore effectively wreck the impact of the Bill.
The hon. Member for Kensington (Mr. Fishburn) put the argument forcefully and effectively when he said that a failure to get it right on this occasion would come back to haunt us. I took part in the discussions on the Landlord and Tenant Act 1987. The Act was an attempt to tackle the problem of freeholders maltreating leaseholders and abusing their position. It was an attempt to rectify some of the problems. The warnings that we voiced then—that, because the legislation was not right, we should have to come back and deal with the matter again—were true. Such a warning is even more true this evening.
My first observation concerns the lack of any need for the low rent test. We have heard frequent references to the Lord Chancellor's Department's view in the consultation paper on commonhold. It would be an absurd anomaly if, were commonhold to come back to the House perhaps in the next Session or perhaps in the subsequent Session, we were to debate the issue simply because the Government had insisted and managed to obtain a majority in favour of the low rent test in this legislation, when, in the commonhold legislation, there was seen to be no need for it. The whole issue would have to be dealt with again, and there would be obvious anomalies.
The Leasehold Enfranchisement Association has provided valuable information through the indefatigable Joan South and others and assisted hon. Members to consider all the issues. The association makes it clear that it is not a problem and that it is a spectre which the Government have conjured up but have not been able to substantiate.
The Consumers Association, in its response, makes exactly the same point. In its survey of leaseholders throughout the country—we are not talking about a purely London problem; we are talking about a problem which affects more than 750,000 leaseholders throughout the country, including many constituencies outside London—it could not find one person in respect of whom the Government suspect that the anomaly might arise, who could be construed as a long leaseholder when in fact he or she was a tenant. It is a non-existent problem, and the Government should recognise that.
The anomalies that will be created have been referred to frequently. I do no more than quote one example involving a leaseholder in Hackney, London, who very persuasively writes:
I own a long lease on a house in Hackney which I purchased in 1982 for £47,000. The lease has about 30 years to run. I paid £230 per annum ground rent and the rateable


value at the start of my lease was around £340 per annum. It is clear that my lease, like many others, has been deliberately manipulated to make me unenfranchiseable. Obviously, that odious qualification will be exploited by landlords to make flats unenfranchiseable.
That could not be put more effectively. Thousands of leaseholders in that position are already debarred.
As sure as can be, if the low rent test remains in the legislation, freeholders seeking to prevent the will of Parliament and to prevent their leaseholders from enfranchising will, in all future lettings, engineer ground rent figures to ensure that they are above the figure of £1,000 in London or £250 elsewhere, and thereby ensure that leaseholders are disfranchised.
The low rent test is a charter for the freeholder who seeks to frustrate the wishes of Parliament. It is a charter for the person who does not want to allow the Bill to proceed. It would be a disastrous mistake if we were to give comfort to the enemies of the Bill—people who have been seeking to frustrate it, people who represent vested interests, and people who represent the old privileges—if they were to achieve a victory by the back door when the argument has gone so forcefully against them.
The Government have failed entirely to produce any evidence to support their case that there is a need for the test. In Committee, on other issues we heard the Minister argue that it was necessary to produce evidence to justify amendments and changes that the Opposition sought. In the absence of convincing, solid evidence of a real problem—the Minister has so far failed to produce it, and I doubt whether he will do so tonight, but I shall listen attentively
—it would be very foolish indeed to allow the low rent test to remain in the Bill and thereby create anomalies and the opportunity for people to frustrate the wishes of Parliament.
The case has been made overwhelmingly by many hon. Members. I sincerely hope that, at this late hour, the Minister will heed them and will respond positively and make it unnecessary for a Division to occur. If there is a Division, I sincerely hope that Conservative Members who, for whatever reason, were hesitant to support us in Committee, will not feel inhibited tonight and will vote in favour of getting rid of the low rent test. That would be a vote in favour of leasehold enfranchisement and in favour of people exercising their right.
We know that it is proper for people to have the right to control their own homes and not to depend on the interests of freeholders and landed interests who will seek to exploit their traditional ownership in order to frustrate the opportunities, wishes and aspirations of leaseholders.

Sir George Young: This has been a debate of the highest quality. The quality has been in no way diminished by the fact that all the arguments have been on one side.
I begin by referring to a point made by the hon. Member for Burnley (Mr. Pike) when he urged the Government to adopt the same attitude as they had adopted in earlier debates— to resist the freeholder case. There is a distinction between this debate and earlier ones, in that the new clauses and amendments which were tabled in the earlier ones sought to take rights away from those who will have rights granted to them under the Bill. The Government resisted that.
This debate is slightly different in that it seeks to add to the Bill additional rights for those who do not have them

at present. It would be consistent for the Government to resist the arguments in the earlier debates and resist those which have been raised this evening, as I propose to do.
First, I commend the consistency of my hon. Friends. Having made their points, they voted as they propose to vote tomorrow: they will vote for Third Reading. It would be somewhat perverse for Opposition Members to vote today to abolish the low rent test and then vote tomorrow to abolish enfranchisement. That is wholly inconsistent but we have been told that tomorrow evening Labour Members plan to vote against Third Reading.

Mr. Straw: Labour Members listen to the arguments on the merits. I give the Minister an absolute guarantee that, if he accepts the argument for that amendment—which comes from the Conservative as well as the Labour side —we will support the Bill on Third Reading. What will happen if the Minister does not accept the amendments remains to be seen.

Sir George Young: I am not quite sure if the hon. Gentleman realises what he said. In Standing Committee, Labour Members made it clear that they would support the Bill if it did not contain simply enfranchisement provisions. They voted against the Bill on Second Reading and in Committee—and I am sure that they plan to vote against it tomorrow—because it contains provisions for compulsory competitive tendering and the tenants' veto on housing management.
The hon. Member for Blackburn (Mr. Straw) said that his is prepared to trade the principal objections which his hon. Friends deployed hourly and daily in Committee if the Government concede the amendment. I see a look of gloom on some of his hon. Friends' faces. In Committee, they defended the past daily. As a result of one flippant intervention from the shadow Secretary of State, their principles are simply waived aside.

Mr. Straw: The intervention was far from flippant. I should like the Minister to address the merits of the case which have been powerfully put by my hon. Friend the Member for Burnley and some of my hon. Friends. It is no good the Minister waffling on about what he fantasises are the possible decisions made by the Labour party to which we are party and he is not. He needs to get down to the merits of the case. What possible justification is there for ruling out a large number of tenants on the basis of the so-called low rent test?

Sir George Young: The hon. Gentleman knows perfectly well that I will address the merits of the argument shortly. He said that the Labour party's objection to our proposals on compulsive competitive tendering are negotiable. They are not principles at all; they are negotiable. He said that they will support the Bill on Third Reading if the Government concede the amendment. That is trading the objections of principle which his hon. Friends made in the Standing Committee. Labour Members must get their act together.
My hon. Friends the Members for Kensington (Mr. Fishburn) and for Eastbourne (Mr. Waterson) and my right hon. Friend the Member for Westminster, North (Sir J. Wheeler) made some moving speeches. My hon. Friend the Member for Kensington chided the Government for not being radical enough. If he had listened to the earlier debate, as I did, I am sure that he would agree that many


of our right hon. and hon. Friends think that we have embarked on a radical reform. It seems to be something of a paradox that an hour ago we were accused of betraying the freeholder and now we are accused of betraying the leaseholder. I shall address the merits of the case put by my hon. Friends, the hon. Member for Burnley (Mr. Pike) and others.
We debated the matter at some length in Committee and undertook to look again at the issues surrounding the test and to return to it on Report. Let me make it clear that it has been one of the most difficult decisions that we have had to take. We have consulted, discussed and debated the matter. We have seen hon. Members and representatives of leaseholders. We understand just how complex it is and that there are extremely strong arguments for retaining the test as well as for abolishing it. That said, I have to tell the House that the Government have decided that the low rent test should be retained in its current form. Let me explain to the House why we have reached that conclusion.
The comparison of the annual ground rent to the rateable value or, in the case of pre-1963 leases, the letting value—is a simple test used to distinguish what are, in theory, renting tenancies from "ownership" tenancies. It appears in roughly the same form in several pieces of important landlord and tenant legislation—including the Landlord and Tenant Act 1954, the Leasehold Reform Act 1967, the precedent for the Bill, and the Rent Act 1977. It has had quite an impact on the residential property market over several decades and we should not therefore relinquish or alter it lightly.
We have already provided that the test for flats be applied to the ground rent and rateable or letting value during the first year of the lease, rather than the date of the claim, as a concession to bringing within the scope of the Bill leases with rent reveiw clauses. Many leases are subject to such clauses which have effect periodically, typically every five, 10 or 20 years. The reviews are often linked to an inflation index or similar provisions in an Act arid are included to maintain the level of ground rent payments by periodic adjustment. However, rent review clauses vary in many ways and can produce vastly different results.
When the leases are first granted, the ground rent is low —less than two-thirds of the rateable or letting value. But a review will often push the ground rent up beyond the low rent threshold—something which most leaseholders cannot be expected to predict. With the old-style test which took account of the rent and rateable value on either a fixed date—March 1965 in the 1967 Act—or the first day of the term, some leaseholders would have found themselves unable to satisfy the low rent test—and unable to enfranchise. The new-style test is designed to help them.
We propose also to amend the Leasehold Reform Act to give leaseholders in houses the choice between the original low rent test and this new one for flats. For leases granted since 1 April 1990 when rental equivalent values were first employed, a different test applies.
The argument has been put several times that the requirement that a qualifying tenant be a long leaseholder is a sufficient test of ownership. That is not the case. Leases which are not at a low rent would fall within the rent and housing Acts unless the property has a rateable value in excess of the prescribed limits. These are by definition renting tenancies.
The Government believe that the low rent test provides an important distinction between the rental and the long lease market and marks the extent of the transfer of equity

between landlord and tenant. It is important to enfranchise only those interests where the freeholder has given up all but a residual interest in the property. We do not wish to extend enfranchisement or the right to buy to the private rented sector and the low rent test is a means of achieving this. We know that there are long leases with rents of £5,000 or £10,000 a year, so we cannot rely on the long lease test alone.
The hon. Member for Greenwich (Mr. Raynsford) challenged me to see whether we had any evidence that there were such leases and I have in front of me a letter from one of the major estates in London, which says:
We have well over 50 properties defined in statute as long' but where the rent is in excess of £5,000 pa and many of these are over £10,000 pa.
So there is a need for a distinction between leases and rented property.

Sir John Wheeler: As a baronet, my hon. Friend is generous to give way, but he is skating on thin ice. Not one Member on either side of the Chamber has spoken in support of the Government in this debate. Will he allow that when the debate goes to their Lordships' House, their Lordships may take the voice of this House as the authentic voice on the issue?

Sir George Young: It is not for me, albeit as a baronet, to guess what will happen at the other end of the Palace. In the preceding debate, there was unanimity on this side of the House on requiring leaseholders to pay far more than my right hon. Friend would like. Not one Conservative Member made the case that I am sure that my right hon. Friend would have wished. None the less, the Government resisted those arguments, and we had to endure some criticism for doing so. So my right hon. Friend cannot rely too much on the weight of opinion among Conservative Members. He may find that the argument works to his disadvantage in later debates.

Sir Jerry Wiggin: Will my hon. Friend allow me to place it on record that the fact that a contrary voice was not heard was due to the certain knowledge that he would be robust on the subject?

Sir George Young: I am grateful to my hon. Friend, albeit at this late stage in the debate, for a voice in support of the case which the Government are deploying.
The low rent test ensures that long leases granted at a high rent, perhaps—in the case of houses—at a premium which reflected the non-enfranchiseable nature of the lease, or where the landlord continues to have a high financial interest in the block, cannot be enfranchised. There is evidence—I have deployed it—that there is some blurring of these lines which makes a division important, particularly in London where there is some overlap of ground rents of long leases and market rents.
Amendment No. 124 refers to "annual letting values". While I acknowledge their inclusion for pre-1963 leases in the Leasehold Reform Act 1967 and the Bill under discussion today, I dispute that they are the appropriate means to determine whether a lease is at a low rent or not.
The reason for their inclusion in 1967 was to take account of the delay in a rating revaluation after the second world war. This meant that after the war the incompatibility between genuine ground rents and any test based on pre-war rateable values was sufficient to justify the use of letting or rental values instead. As all residential


rents were statutorily controlled at that time, there was a single market in rents which made the test effective and easy to apply.
That approach simply would not work today, with leases granted since the introduction of enfranchisement for houses and since the deregulation of rents in the letting market because of the wide gulf that exists between regulated rents and market rents. I acknowledge that in a few cases some landlords have been granting new leases on houses at high rents to avoid enfranchisement. But in those cases the price of the house and that paid for the lease should have reflected the status of the lease and the fact that it was not enfranchiseable.
The precedent for this Bill, the Leasehold Reform Act 1967, has been on the statute book for 25 years and leaseholders should have known when purchasing their leases that they would not be able to enfranchise. I know that some may not have been aware of this, but we cannot legislate for that reason alone. Nor should we forget that these tenants are already outside the scope of the Leasehold Reform Act. This evening we are not taking away any rights that people already have.
Leases have been created and arrangements have been built around the existing framework. Different legislative regimes apply to high and low ground rents, although in different contexts to enfranchisement, and leases have been drafted in full knowledge of this. It would be wrong to move the goal posts now.
In the case of flats, it is far less likely that ground rents have been manipulated in any way. Enfranchisement for flats is a recent development—first announced to the House in July 1991. As I said earlier, different statutory limits apply for leases granted since April 1990, these being £1,000 in Greater London and £250 elsewhere.
I realise that the announcement that the Government have made will cause disappointment to many interests in the House. Nonetheless, we decided that there are valid arguments for retaining the low rent test in its present form and I invite the House to resist the new clause.

Mr. Pike: The Minister claimed to know how Labour Members would vote tomorrow. He was mistaken, because, even if he had been a fly on the wall at our meeting earlier, he would have found that we made no decision on our vote on Third Reading tomorrow—

It being Ten o'clock, further consideration of the Bill stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 14 ( Exempted business),
That, at this day's sitting, the Housing and Urban Development Bill may be proceeded with, though opposed, until any hour.—[Mr. Arbuthnot.]

Question agreed to.

Question again proposed, That the clause be read a Second time.

Mr. Pike: It was our intention to see how we progressed today and during the debate on important parts of the Bill that we shall discuss before Third Reading tomorrow. I was disappointed at the Minister's response. Perhaps the reason why his voice is affected is that he has no confidence in the points that he is having to make. I do not believe that he believes the things he was telling us; he has been leaned on—whether by the Secretary of State or someone else, I do not know. I do not believe that he was convinced by the

argument and the case that he made. I am convinced that he believes that what we have been arguing for is the right course and that what he has been saying weakens the objectives that the Government have been stating for the Bill.
In response to the intervention by the right hon. Member for Westminster, North (Sir J. Wheeler), the Minister made the valid point that every contribution from both sides was solid in the view that this low rent test was wrong and should be either changed or abolished. The comparison that the Minister chose was false, and a red herring, because he referred to unanimity on the Conservative side on the previous clause. In this debate the unanimity has been across the floor of the House.
The arguments have been well made, but it is right to refer to the speech of the hon. Member for Kensington (Mr. Fishburn). He made two important points, which I believe Conservative Members need to take into account when they decide which way to vote in a couple of minutes.
The hon. Gentleman's first point was that if a Division had been pressed on this in Committee there would have been a majority opposed to the Government's view. Government Members chose not to press the Government on that occasion because of assurances that they would look again at the issue and come back, probably with a new proposal, at Report stage. Those hon. Members must be disappointed that the Government have failed them tonight and failed the people who have leasehold properties. Secondly, it is not just the individual who is affected by the low rent test; it can have an effect on the whole of a property because of the voting numbers necessary. The effect can therefore be extended to people who are not themselves directly disqualified by the test.
The Government have got it wrong and I hope that Conservative Members will vote with us on new clause 18 and stand by the people who want to enfranchise and get the opportunity that the Government claim to offer them —from which they will be barred unless we win new clause 18.

Question put, That the clause be read a Second time:—

The House divided: Ayes 252, Noes 294.

Division No. 146]
[10.04 pm


AYES


Abbott, Ms Diane
Boyes, Roland


Adams, Mrs Irene
Bradley, Keith


Ainger, Nick
Bray, Dr Jeremy


Ainsworth, Robert (Cov'try NE)
Brown, Gordon (Dunfermline E)


Allen, Graham
Brown, N. (N'c'tle upon Tyne E)


Alton, David
Bruce, Malcolm (Gordon)


Anderson, Ms Janet (Ros'dale)
Burden, Richard


Armstrong, Hilary
Byers, Stephen


Ashby, David
Caborn, Richard


Austin-Walker, John
Campbell, Mrs Anne (C'bridge)


Banks, Tony (Newham NW)
Campbell, Menzies (Fife NE)


Barnes, Harry
Campbell, Ronnie (Blyth V)


Barron, Kevin
Campbell-Savours, D. N.


Battle, John
Cann, Jamie


Bayley, Hugh
Carlile, Alexander (Montgomry)


Beckett, Margaret
Chisholm, Malcolm


Beith, Rt Hon A. J.
Clapham, Michael


Bell, Stuart
Clark, Dr David (South Shields)


Benn, Rt Hon Tony
Clarke, Tom (Monklands W)


Bennett, Andrew F.
Clelland, David


Benton, Joe
Clwyd, Mrs Ann


Bermingham, Gerald
Coffey, Ann


Berry, Dr. Roger
Cohen, Harry


Betts, Clive
Connarty, Michael


Blunkett, David
Cook, Robin (Livingston)


Boateng, Paul
Corbett, Robin


Boyce, Jimmy
Corbyn, Jeremy






Corston, Ms Jean
Jones, Ieuan Wyn (Ynys Môn)


Cousins, Jim
Jones, Jon Owen (Cardiff C)


Cox, Tom
Jones, Lynne (B'ham S O)


Cryer, Bob
Jones, Martyn (Clwyd, SW)


Cummings, John
Jones, Nigel (Cheltenham)


Cunliffe, Lawrence
Jowell, Tessa


Cunningham, Jim (Covy SE)
Keen, Alan


Cunningham, Dr John (C'p'l'nd)
Khabra, Piara S.


Dafis, Cynog
Kilfoyle, Peter


Dalyell, Tam
Kirkwood, Archy


Darling, Alistair
Leighton, Ron


Davidson, Ian
Lestor, Joan (Eccles)


Davies, Rt Hon Denzil (Llanelli)
Lewis, Terry


Davies, Ron (Caerphilly)
Litherland, Robert


Davis, Terry (B'ham, H'dge H'l)
Lloyd, Tony (Stretford)


Denham, John
Llwyd, Elfyn


Dewar, Donald
Loyden, Eddie


Dixon, Don
Lynne, Ms Liz


Dobson, Frank
McAllion, John


Donohoe, Brian H.
McAvoy, Thomas


Dowd, Jim
McCartney, Ian


Dunnachie, Jimmy
Macdonald, Calum


Dunwoody, Mrs Gwyneth
McFall, John


Eastham, Ken
McLeish, Henry


Enright, Derek
McMaster, Gordon


Etherington, Bill
McNamara, Kevin


Evans, John (St Helens N)
Madden, Max


Fatchett, Derek
Mahon, Alice


Faulds, Andrew
Marek, Dr John


Field, Frank (Birkenhead)
Marshall, David (Shettleston)


Fishburn, Dudley
Marshall, Jim (Leicester, S)


Fisher, Mark
Martin, Michael J. (Springburn)


Flynn, Paul
Martlew, Eric


Foster, Derek (B'p Auckland)
Meale, Alan


Foster, Don (Bath)
Michael, Alun


Foulkes, George
Michie, Bill (Sheffield Heeley)


Fraser, John
Michie, Mrs Ray (Argyll Bute)


Galloway, George
Milburn, Alan


Gapes, Mike
Miller, Andrew


Garrett, John
Mitchell, Austin (Gt Grimsby)


George, Bruce
Moonie, Dr Lewis


Gerrard, Neil
Morgan, Rhodri


Gilbert, Rt Hon Dr John
Morley, Elliot


Godman, Dr Norman A.
Morris, Rt Hon A. (Wy'nshawe)


Godsiff, Roger
Morris, Estelle (B'ham Yardley)


Golding, Mrs Llin
Morris, Rt Hon J. (Aberavon)


Gordon, Mildred
Mowlam, Marjorie


Gould, Bryan
Mudie, George


Griffiths, Nigel (Edinburgh S)
Mullin, Chris


Griffiths, Win (Bridgend)
Murphy, Paul


Grocott, Bruce
Oakes, Rt Hon Gordon


Gunnell, John
O'Brien, Michael (N W'kshire)


Hain, Peter
O'Brien, William (Normanton)


Hall, Mike
Olner, William


Hanson, David
O'Neill, Martin


Hardy, Peter
Orme, Rt Hon Stanley


Harman, Ms Harriet
Parry, Robert


Harvey, Nick
Pickthall, Colin


Henderson, Doug
Pike, Peter L.


Heppell, John
Pope, Greg


Hill, Keith (Streatham)
Powell, Ray (Ogmore)


Hinchliffe, David
Prentice, Ms Bridget (Lew'm E)


Hoey, Kate
Prentice, Gordon (Pendle)


Home Robertson, John
Prescott, John


Hood, Jimmy
Primarolo, Dawn


Hoon, Geoffrey
Purchase, Ken


Howarth, George (Knowsley N)
Radice, Giles


Howells, Dr. Kim (Pontypridd)
Raynsford, Nick


Hoyle, Doug
Redmond, Martin


Hughes, Kevin (Doncaster N)
Reid, Dr John


Hughes, Roy (Newport E)
Robertson, George (Hamilton)


Hughes, Simon (Southwark)
Robinson, Geoffrey (Co'try NW)


Hutton, John
Roche, Mrs. Barbara


Illsley, Eric
Rogers, Allan


Ingram, Adam
Rooney, Terry


Jackson, Glenda (H'stead)
Ross, Ernie (Dundee W)


Jackson, Helen (Shef'ld, H)
Ruddock, Joan


Jamieson, David
Salmond, Alex


Janner, Greville
Sedgemore, Brian


Jones, Barry (Alyn and D'side)
Sheerman, Barry





Sheldon, Rt Hon Robert
Vaz, Keith


Shore, Rt Hon Peter
Walker, Rt Hon Sir Harold


Simpson, Alan
Walley, Joan


Skinner, Dennis
Wardell, Gareth (Gower)


Smith, Andrew (Oxford E)
Watson, Mike


Smith, C. (Isl'ton S & F'sbury)
Welsh, Andrew


Smith, Llew (Blaenau Gwent)
Wheeler, Rt Hon Sir John


Snape, Peter
Wicks, Malcolm


Soley, Clive
Williams, Rt Hon Alan (Sw'n W)


Spearing, Nigel
Williams, Alan W (Carmarthen)


Spellar, John
Wilson, Brian


Squire, Rachel (Dunfermline W)
Winnick, David


Steinberg, Gerry
Wise, Audrey


Stevenson, George
Worthington, Tony


Stott, Roger
Wray, Jimmy


Strang, Dr. Gavin
Wright, Dr Tony


Straw, Jack
Young, David (Bolton SE)


Taylor, Mrs Ann (Dewsbury)



Taylor, Matthew (Truro)
Tellers for the Ayes:


Tipping, Paddy
Mr. Jack Thompson and


Turner, Dennis
Mr. Andrew Mackinlay.




NOES


Adley, Robert
Conway, Derek


Ainsworth, Peter (East Surrey)
Coombs, Anthony (Wyre For'st)


Aitken, Jonathan
Coombs, Simon (Swindon)


Alexander, Richard
Cope, Rt Hon Sir John


Alison, Rt Hon Michael (Selby)
Couchman, James


Allason, Rupert (Torbay)
Cran, James


Amess, David
Currie, Mrs Edwina (S D'by'ire)


Ancram, Michael
Davies, Quentin (Stamford)


Arbuthnot, James
Davis, David (Boothferry)


Arnold, Jacques (Gravesham)
Day, Stephen


Arnold, Sir Thomas (Hazel Grv)
Deva, Nirj Joseph


Atkinson, David (Bour'mouth E)
Devlin, Tim


Baker, Rt Hon K. (Mole Valley)
Dickens, Geoffrey


Baker, Nicholas (Dorset North)
Dicks, Terry


Baldry, Tony
Dorrell, Stephen


Banks, Matthew (Southport)
Douglas-Hamilton, Lord James


Banks, Robert (Harrogate)
Dover, Den


Bates, Michael
Duncan, Alan


Batiste, Spencer
Duncan-Smith, Iain


Bellingham, Henry
Dunn, Bob


Bendall, Vivian
Durant, Sir Anthony


Beresford, Sir Paul
Dykes, Hugh


Biffen, Rt Hon John
Eggar, Tim


Body, Sir Richard
Elletson, Harold


Bonsor, Sir Nicholas
Emery, Rt Hon Sir Peter


Booth, Hartley
Evans, David (Welwyn Hatfield)


Boswell, Tim
Evans, Jonathan (Brecon)


Bottomley, Rt Hon Virginia
Evans, Nigel (Ribble Valley)


Bowden, Andrew
Evans, Roger (Monmouth)


Bowis, John
Evennett, David


Boyson, Rt Hon Sir Rhodes
Faber, David


Brandreth, Gyles
Fabricant, Michael


Brazier, Julian
Fairbairn, Sir Nicholas


Bright, Graham
Fenner, Dame Peggy


Brooke, Rt Hon Peter
Field, Barry (Isle of Wight)


Brown, M. (Brigg & Cl'thorpes)
Forman, Nigel


Browning, Mrs. Angela
Forsyth, Michael (Stirling)


Bruce, Ian (S Dorset)
Forth, Eric


Burns, Simon
Fowler, Rt Hon Sir Norman


Burt, Alistair
Fox, Dr Liam (Woodspring)


Butcher, John
Fox, Sir Marcus (Shipley)


Butler, Peter
Freeman, Roger


Butterfill, John
French, Douglas


Carlisle, John (Luton North)
Fry, Peter


Carlisle, Kenneth (Lincoln)
Gale, Roger


Carrington, Matthew
Gardiner, Sir George


Carttiss, Michael
Garel-Jones, Rt Hon Tristan


Channon, Rt Hon Paul
Garnier, Edward


Chaplin, Mrs Judith
Gill, Christopher


Churchill, Mr
Gillan, Cheryl


Clappison, James
Goodson-Wickes, Dr Charles


Clark, Dr Michael (Rochford)
Gorman, Mrs Teresa


Clarke, Rt Hon Kenneth (Ruclif)
Grant, Sir Anthony (Cambs SW)


Clifton-Brown, Geoffrey
Greenway, Harry (Ealing N)


Coe, Sebastian
Greenway, John (Ryedale)


Colvin, Michael
Griffiths, Peter (Portsmouth, N)


Congdon, David
Grylls, Sir Michael






Hague, William
Nelson, Anthony


Hamilton, Rt Hon Archie (Epsom)
Neubert, Sir Michael


Hamilton, Neil (Tatton)
Newton, Rt Hon Tony


Hampson, Dr Keith
Nicholls, Patrick


Hanley, Jeremy
Nicholson, David (Taunton)


Hannam, Sir John
Nicholson, Emma (Devon West)


Hargreaves, Andrew
Norris, Steve


Hawkins, Nick
Onslow, Rt Hon Sir Cranley


Hawksley, Warren
Oppenheim, Phillip


Hayes, Jerry
Ottaway, Richard


Heald, Oliver
Page, Richard


Heathcoat-Amory, David
Paice, James


Hendry, Charles
Patnick, Irvine


Heseltine, Rt Hon Michael
Patten, Rt Hon John


Higgins, Rt Hon Sir Terence L.
Pattie, Rt Hon Sir Geoffrey


Hill, James (Southampton Test)
Pawsey, James


Hogg, Rt Hon Douglas (G'tham)
Peacock, Mrs Elizabeth


Horam, John
Pickles, Eric


Hordern, Rt Hon Sir Peter
Porter, Barry (Wirral S)


Howard, Rt Hon Michael
Porter, David (Waveney)


Hughes Robert G. (Harrow W)
Portillo, Rt Hon Michael


Hunt, Rt Hon David (Wirral W)
Powell, William (Corby)


Hunt, Sir John (Ravensbourne)
Rathbone, Tim


Hunter, Andrew
Redwood, John


Hurd, Rt Hon Douglas
Richards, Rod


Jack, Michael
Riddick, Graham


Jackson, Robert (Wantage)
Robathan, Andrew


Jenkin, Bernard
Roberts, Rt Hon Sir Wyn


Johnson Smith, Sir Geoffrey
Robertson, Raymond (Ab'd'n S)


Jones, Gwilym (Cardiff N)
Robinson, Mark (Somerton)


Jones, Robert B. (W Hertfdshr)
Roe, Mrs Marion (Broxbourne)


Jopling, Rt Hon Michael
Rowe, Andrew (Mid Kent)


Kellett-Bowman, Dame Elaine
Rumbold, Rt Hon Dame Angela


Key, Robert
Ryder, Rt Hon Richard


Kilfedder, Sir James
Sackville, Tom


King, Rt Hon Tom
Sainsbury, Rt Hon Tim


Knapman, Roger
Scott, Rt Hon Nicholas


Knight, Mrs Angela (Erewash)
Shaw, David (Dover)


Knight, Greg (Derby N)
Shaw, Sir Giles (Pudsey)


Knox, David
Shephard, Rt Hon Gillian


Lait, Mrs Jacqui
Shepherd, Colin (Hereford)


Lamont, Rt Hon Norman
Shersby, Michael


Lang, Rt Hon Ian
Sims, Roger


Lawrence, Sir Ivan
Skeet, Sir Trevor


Legg, Barry
Smith, Sir Dudley (Warwick)


Leigh, Edward
Smith, Tim (Beaconsfield)


Lennox-Boyd, Mark
Soames, Nicholas


Lester, Jim (Broxtowe)
Speed, Sir Keith


Lidington, David
Spencer, Sir Derek


Lightbown, David
Spicer, Sir James (W Dorset)


Lilley, Rt Hon Peter
Spicer, Michael (S Worcs)


Lloyd, Peter (Fareham)
Spink, Dr Robert


Lord, Michael
Spring, Richard


Luff, Peter
Sproat, Iain


Lyell, Rt Hon Sir Nicholas
Squire, Robin (Hornchurch)


MacGregor, Rt Hon John
Steen, Anthony


MacKay, Andrew
Stephen, Michael


Maclean, David
Stern, Michael


McLoughlin, Patrick
Stewart, Allan


McNair-Wilson, Sir Patrick
Streeter, Gary


Madel, David
Sumberg, David


Maitland, Lady Olga
Sweeney, Walter


Major, Rt Hon John
Sykes, John


Malone, Gerald
Tapsell, Sir Peter


Mans, Keith
Taylor, Ian (Esher)


Marland, Paul
Taylor, John M. (Solihull)


Marlow, Tony
Taylor, Sir Teddy (Southend, E)


Marshall, John (Hendon S)
Temple-Morris, Peter


Martin, David (Portsmouth S)
Thompson, Sir Donald (C'er V)


Mawhinney, Dr Brian
Thompson, Patrick (Norwich N)


Merchant, Piers
Thornton, Sir Malcolm


Milligan, Stephen
Thurnham, Peter


Mills, Iain
Townend, John (Bridlington)


Mitchell, Andrew (Gedling)
Townsend, Cyril D. (Bexl'yh'th)


Moate, Sir Roger
Tracey, Richard


Molyneaux, Rt Hon James
Tredinnick, David


Monro, Sir Hector
Trend, Michael


Montgomery, Sir Fergus
Trotter, Neville


Moss, Malcolm
Twinn, Dr Ian


Needham, Richard
Vaughan, Sir Gerard





Viggers, Peter
Wiggin, Sir Jerry


Waldegrave, Rt Hon William
Willetts, David


Walden, George
Wilshire, David


Walker, Bill (N Tayside)
Winterton, Mrs Ann (Congleton)


Waller, Gary
Wolfson, Mark


Ward, John
Wood, Timothy


Wardle, Charles (Bexhill)
Yeo, Tim


Watts, John
Young, Sir George (Acton)


Wells, Bowen



Whitney, Ray
Tellers for the Noes:


Whittingdale, John
Mr. Sydney Chapman and


Widdecombe, Ann
Mr. Timothy Kirkbope.

Question accordingly negatived.

Clause 4

PREMISES EXCLUDED FROM RIGHT

Amendment proposed: No. 21, in page 5, line 21, leave out '10' and insert '20'.—[Mr. Fishburn.]

Mr. Baldry: The Minister of State and I said in Committee that we would reflect further on the right threshold for commercial use, because clause 4(1) excludes from enfranchisement premises where more than 10 per cent. of the internal floor area is given over to commercial use.
We have considered the matter extremely carefully. My hon. Friend the Member for Kensington (Mr. Fishburn) has been a powerful advocate in favour of raising the threshold to 20 per cent. of the internal floor area. We have come to the conclusion that it should remain at 10 per cent. That threshold was chosen carefully, after extensive sampling and taking of expert advice.
There is great concern that our proposals for residential property should not spill over into the commercial market, as anything that undermined the generally satisfactory workings of that market would be unwelcome.
I am aware of the concerns of tenants residing in mixed-use property that will be excluded from enfranchisement. Many of them have argued for the 10 per cent. threshold to be increased. The business sector is, however, just as concerned that enfranchisement should not affect the commercial property market and commercial tenants are concerned about the implications of control by leaseholders who are inexperienced in the management of commercial property.
The commercial parts of a block are much more valuable than the residential space. Commercial space is typically worth 15 to 20 times as much as residential space, and if the threshold were raised, residential tenants might have to purchase property that was worth more than their own interest. In those circumstances, in many cases the participating tenants would not be able to afford to buy the freehold, and would be left with no benefit because they would not have the right to buy a new lease. They would be given the right without the remedy. We concluded that increasing the threshold, and thus the number of mixed-use blocks eligible for enfranchisement, would not help leaseholders and could harm many of them.
There are arguments on both sides, but we think that we have struck the right balance. We must remember that


leaseholders with leases that are not capable of enfranchisement will have the right to lease renewal under chapter II.
If experience shows that 10 per cent. threshold is causing problems, it can be dealt with using the reserve powers in clause 4(3), which allow the Secretary of State to specify a different percentage threshold later should the need arise, although we do not think that that is likely to be necessary.
I hope that I have reassured hon. Members that the threshold should remain at 10 per cent., and I invite my hon. Friend to withdraw his amendment.

Mr. Fishburn: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11

NOTICE BY QUALIFYING TENANTS OF CLAIM TO EXERCISE RIGHT

Amendment made:

No. 79, page 244, line 21, at end insert—


'1985 c. 71.
The
Housing
In section 6(3), "12,".



(Consequential

In Schedule 2,



Provisions)
Act
paragraph 12.'.



1985.

—[Mr. Baldry]

Schedule 3

THE INITIAL NOTICE: SUPPLEMENTARY PROVISIONS

Amendments made:

No. 66, in page 172, line 4, at end insert—

'Restrictions for purposes of s. 12(3) on tenant electing to become participating tenant during currency of claim

7A.—(1) Where a relevant notice of claim is given, a qualifying tenant of a flat may not subsequently make an election under section 12(3)—

(a) if he was prohibited from participating in the giving of the notice by virtue of paragraph 1, 2(1), 3(1) or 4(1) above; or
(b) at a time when he would be so prohibited from participating in the giving of a relevant notice of claim, if such a notice were to be given then.

(2) Where a relevant notice of claim is given, then except with the leave of the court, a qualifying tenant of a flat may not subsequently make an election under section 12(3) at a time when any proceedings are pending to enforce a night of re-entry or forfeiture terminating his lease of the flat.

(3) Leave shall only be granted under sub-paragraph (2) if the court is satisfied that the tenant does not wish to make such an election solely or mainly for the purpose of avoiding the consequences of the breach of the terms of his lease in respect of which proceedings are pending.

(4) If—

(a) leave is so granted, and
(b) the tenant makes such an election,

the tenant's lease shall be deemed for the purposes of the claim to be a subsisting lease despite the existence of those proceedings and any order made afterwards in those proceedings; and, if the claim is effective, the court in which those proceedings were brought may set aside or vary any such order to such extent and on such terms as appear I o that court to be appropriate.

(5) References in this paragraph and paragraph 7B below to making an election under section 12(3) are references to making such an election to participate in the making of the claim in respect of which the relevant notice of claim is given.

Effect of tenant's election on certain notices given by landlord.

7B.—(1) This paragraph applies to a qualifying tenant of a flat who, following the giving of a relevant notice of claim, makes an election under section 12(3).

(2) Where in the case of any such tenant—

(a) a landlord's notice terminating the tenant's lease of the flat has been given or served as mentioned in paragraph 2(1) above (whether or not the notice has effect to terminate the lease), but
(b) that notice was not given or served more than four months before the date when the tenant makes his election under section 12(3),

the landlord's notice shall cease to have effect on that date.

(3) If—

(a) any such landlord's notice ceases to have effect by virtue of sub-paragraph (2) above, but
(b) the claim made in pursuance of the relevant notice of claim is not effective,

then paragraph 2(4) above shall apply to any landlord's notice terminating the tenant's lease of the flat which—

(i) is given under section 4 of the Landlord and Tenant Act 1954 or served under paragraph 4(1) of Schedule 10 to the Local Government and Housing Act 1989, and
(ii) is so given or served within one month after the expiry of the period of currency of that claim;

and paragraph 2(5) above shall apply accordingly.

(4) Paragraph 7A(5) above applies for the purposes of this paragraph.'.—[Mr. Baldry.]

No. 67, in page 172, line 39, leave out from
'premises,' to end of line 41.—[Mr. Baldry.]

Clause 12

THE PARTICIPATING TENANTS

Amendments made:

No. 41, in page 16, line 39 leave out 'subsection (4))' and insert 'paragraph 7A of Schedule 3)'.

No. 42, in page 16, leave out lines 43 to 45.—[Mr. Baldry.]

Clause 18

REVERSIONER'S COUNTER-NOTICE

Amendment made:

No. 43, in page 25, line 15 [Clause 18], at end insert 'section 30 and'—[Mr. Baldry.]

Clause 20

TENANTS' CLAIM LIABLE TO BE DEFEATED WHERE LANDLORD INTENDS TO REDEVELOP

Amendments made:

No. 44, in page 27, line 29, leave out 'landlord' and insert 'reversioner'.

No. 45, in page 27, line 36, leave out 'landlord' and insert 'reversioner'.

No. 46, in page 27, line 37, leave out 'tenant' and insert 'nominee purchaser'.

No. 47, in page 28, line 5, leave out 'any' and insert 'the specified'.—[Mr. Baldry.]

Schedule 4

VESTING ORDERS UNDER SECTIONS 2I AND 22

Amendment made:

No. 68, in page 175, line 14, at end insert—

'Supplemental

5.—(1) In the provisions specified in sub-paragraph (2) references to a binding contract being entered into in pursuance of the initial notice shall be read as including references to the making of a vesting order.

(2) Those provisions are—

(a) section 12(12);


(b) section 13(12) (except so far as it provides for the interpretation of references to the nominee purchaser);
(c) section 14(10);
(d) section 16(5) (b);
(e) section 25(1); and
(f) section 27(4) and (5).

(3) In section 34(2) (except so far as it provides for the interpretation of references to the proposed aquisition by the nominee purchaser) the reference to a contract entered into in pursuance of the initial notice shall be read as including a reference to a vesting order.'.—[Mr. Baldry.]

Clause 23

APPLICATIONS WHERE RELEVANT LANDLORD CANNOT BE FOUND

Amendments made:

No. 48, in page 32, line 3, after 'person', insert 'or persons'.

No. 49, in page 32, line 26, leave out first 'any' and insert 'every'.—[Mr. Baldry.]

Schedule 5

PURCHASE PRICE PAYABLE BY NOMINEE PURCHASER

Amendment made:

No. 69, in page 179, line 12, after 'the', insert 'minor'. —[Mr. Baldry.]

No. 70, in page 179, line 25, leave out from 'year),' to end of line 26 and insert
'of the remainder of the term of the minor intermediate lease as at the valuation date.'.

Clause 30

CONVEYANCE TO NOMINEE PURCHASER

Amendment made:

No. 50, in page 39, line 45, leave out 'subsection (7)' and insert 'subsections (7) and (8)'.—[Mr. Baldry.]

Schedule 6

CONVEYANCE TO NOMINEE PURCHASER ON ENFRANCHISEMENT

Amendment made:

No. 71, in page 182, line 45, leave out 'or' and insert 'and'.—[Mr. Baldry.]

Schedule 8

GRANT OF LEASES BACK TO FORMER FREEHOLDER

Amendment made:

No. 72, in page 186, line 31, leave out 'at' and insert 'immediately before'.—[Mr. Baldry.]

Clause 34

INTERPRETATION OF CHAPTER I

Amendment made:

No. 51, in page 41, line 26, leave out '(2)'.—[Mr. Baldry.]

Clause 35

RIGHT OF QUALIFYING TENANT OF FLAT TO ACQUIRE NEW LEASE

Amendments made:

No. 52, in page 42, line 29, after '(3)', insert
'Subject to subsections (3A) and (3B) below,'.

No. 53, in page 42, line 36, at end insert—

'(3A) In its application in accordance with subsection (3) above section 5 shall have effect with the omission of subsection (5) of that section; but where apart from this subsection—

(a) a person would be regarded for the purposes of this Chapter as being (or as being among those constituting) the qualifying tenant of a flat, and
(b) that person would also be regarded for those purposes as being (or as being among those constituting) the qualifying tenant of each of two or more other flats contained in the building in which that flat is contained,

then, whether that person is tenant of the flats referred to in paragraphs (a) and (b) under a single lease or otherwise, there shall be taken for those purposes to be no qualifying tenant of any of those flats.

(3B) Subsection (6) of section 5 shall have effect for the purposes of subsection (3A) above in its application to a body corporate as it has effect for the purposes of subsection (5) of that section in its application to a body corporate.'.—[Mr. Baldry.]

Clause 41

LANDLORD'S COUNTER-NOTICE

Amendment made: No. 54, in page 46, line 34, leave out 'Where the landlord receives the tenant's notice, he' and insert 'The landlord'.—[Mr. Baldry.]

Schedule 12

PREMIUM AND OTHER AMOUNTS PAYABLE BY TENANT ON GRANT OF NEW LEASE

Amendments made: No. 73, in page 201, line 35, leave out sub-paragraphs (2) and (3) and insert—

'(2) The marriage value is the difference between the following amounts, namely—

(a) the aggregate of—

(i) the value of the interest of the tenant under his existing lease,
(ii) the value of the landlord's interest in the tenant's flat prior to the grant of the new lease, and
(iii) the values prior to the grant of that lease of all intermediate leasehold interests (if any); and

(b) the aggregate of—

(i) the value of the interest to be held by the tenant under the new lease,
(ii) the value of the landlord's interest in the tenant's flat once the new lease is granted, and
(iii) the values of all intermediate leasehold interests (if any) once that lease is granted.

(3) For the purposes of sub-paragraph (2)—

(a) the value of any interest of the tenant shall be determined as at the valuation date;
(b) the value of any such interest of the landlord as is mentioned in paragraph (a) or paragraph (b) of that sub-paragraph is the amount determined for the purpose of paragraph 3(1)(a) or paragraph 3(1)(b) (as the case may be); and
(c) the value of any intermediate leasehold interest shall be determined in accordance with paragraph 8, and shall be so determined as at the valuation date.'.

No. 74, in page 203, line 9, after 'the', insert 'minor'.

No. 75, in page 203, line 22, at end insert 'as at the valuation date'.—[Mr. Baldry.]

Clause 61

PRICE PAYABLE BY TENANT ON ENFRANCHISEMENT BY VIRTUE OF SECTION 59

Amendment made: No. 55, in page 64, line 43, leave outfrom first 'of to end of line and insert
'any one or more of the provisions of sections 1A and 1B'.—[Mr. Baldry.]

Schedule 14

SECTION 9 OF THE LEASEHOLD REFORM ACT 1967, AS AMENDED

Amendment made: No. 76, in page 209, line 52, leave out from first 'of' to 'above' in line 53 and insert
'any one or more of the provisions of sections 1A arid 1B'.—[Mr. Baldry.]

Clause 62

ESTATE MANAGEMENT SCHEMES

Amendment made: No. 56, in page 65, line 11, leave out from first 'of to 'above)' in line 12 and insert
'any one or more of the provisions of sections 1A and 1B of that Act (as inserted by sections 59 and (Tenancies terminable after death or marriage'.'.—[Mr. Baldry.]

Clause 72

REQUIREMENT RELATING TO INFORMATION ETC. HELD BY SUPERIOR LANDLORD

Amendment made: No. 57, in page 76, line 29, leave out from `(c)' to 'or' in line 30 and insert
'if a date is specified in the notice under subsection (3)(d) of that section, either approve the date'. —[Mr. Baldry.]

Clause 80

JURISDICTION OF LEASEHOLD VALUATION TRIBUNALS

Amendments made: No. 58, in page 83, leave out lines 22 and 23.

No. 59, in page 83, line 27, at end insert—
'(aa) the terms of any lease which is to be granted in accordance with section 32 and Schedule 8;'.— [Mr. Baldry.]

Clause 82

AGREEMENT INCLUDING OR MODIFYING RIGHTS OF TENANT UNDER CHAPTERS I AND II

Amendment made: No. 60, in page 86, line 42, at end insert—
'and section 52(5) shall apply in relation to the lease as it applies in relation to a lease granted under section 52.'.—[Mr. Baldry.]

Clause 86

POWER TO PRESCRIBE PROCEDURE UNDER CHAPTERS I AND II

Amendment made: No. 61, in page 90, line 7, after 'claim' insert
'made by the giving of a notice under section 38'.—[Mr. Baldry.]

Clause 89

GENERAL INTERPRETATION OF PART I

Amendment made: No. 62, in page 91, line 39, leave out from 'floor' to end of line 44 and insert—

'(a) which forms part of a building and
(b) which is constructed or adapted for use for the purposes of a dwelling, and
(c) either the whole or a material part of which lies above or below some other part of the building;'.—[Mr. Baldry.]

New clause 16

MANAGEMENT AGREEMENT WITH HOUSING CO-OPERATIVES

. After section 22 of the 1987 Act there shall be inserted the following section—

Management agreements with housing co-operatives.

22A.—(1) In this section 'housing co-operative' has the meaning given in subsection (1) of section 22 except that the reference in that subsection to the Secretary of State's approval shall be construed as a reference to his approval in relation to the purposes of this section.

(2) On an application by a housing co-operative a local authority shall make an agreement with them for the performance by that housing co-operative, on such terms as may be provided in the agreement, of the local authority's functions under section 17(1) relating to the management of houses which are subject to the agreement.

(3) Before making such an agreement the local authority shall satisfy themselves that the housing co-operative—

(a) have the approval of the Secretary of State;
(b) are able to perform the functions competently and efficiently;
(c) are representative of the tenants of the houses.

(4) Where the local authority refuse to enter into an agreement on the grounds that the housing co-operative do not satisfy paragraph (b) or (c) of subsection (3), the housing co-operative may appeal to the Secretary of State who may confirm or reverse the decision of the local authority.

(5) Where the Secretary of State reverses the decision of the local authority, the authority and the housing co-operative shall make the agreement.

(6) Where the local authority and the housing co-operative are unable to agree on the terms of the agreement, the housing co-operative may appeal to the Secretary of State who may determine the terms of the agreement.

(7) An agreement to which this section applies shall be made only with the approval of the Secretary of State, which may be given either generally or to any local authority or description of local authority or in any particular case, and may be given unconditionally or subject to anyconditions.".'. —[Lord James Douglas-Hamilton.]

Brought up, and read the First time.

The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): I beg to move, That the Clause be read a Second time.

Madam Speaker: I understand that with this it will be convenient to discuss also Government amendments Nos. 110 to 112.

Lord James Douglas-Hamilton: New clause 16 gives tenants who form themselves into a housing co-operative the right to manage their homes. It is an important part of our proposal under the tenants charter to strengthen the powers of individual tenants and involve them in the management of their homes. We believe that it will fundamentally improve the control which tenants have over their houses if they are given the right to manage.
There are a number of requirements in the new clause which offer important protection for existing tenants.
First, the way in which the houses are managed is very important to the tenants of those houses, and we need to be certain that a co-operative taking over the housing management function is competent to do the task that it sets out to do. There is no point in handing over management to a group of tenants whose interests will have moved on to other matters in six months' time.
Secondly, the co-operative needs to be efficient. While it is our desire to give more control to tenants, if their costs are twice the normal management costs, tenants will suffer. Consequently, there is a need to maintain efficiency.
Finally—this is particularly important in view of the fact that the hon. Member for Dundee, East (Mr. McAllion) gave me notice of his concern—the local authority needs to be satisfied that the co-operative is representative of the tenants in that area and of that group. Again, such protection for tenants is common sense.
Amendment No. 110 seeks to amend section 17(1) of the Housing (Scotland) Act 1987, which provides that the general management of houses held for housing purposes by local authorities shall be vested in and exercised by the authorities. This removes any possible impediment to the powers of a local authority to contract out its housing functions under section 17.
Amendment No. 111 is consequential and amendment No. 112 is the formal repeal in schedule 21.

Mr. John McAllion: I am grateful to the Minister for answering my concerns, of which I gave him notice. I am not sure that what he said relates to what is on the face of the new clause. He said that this clause was about giving tenants the right to form themselves into housing co-ops with the right to manage their own homes. What the new clause says is that, if the housing co-op applies to take over the management, regulation and control of local authority housing stock, the local authority shall then make an agreement with that housing co-op, with certain protection being built in, in terms of the ability of the housing co-op to carry out the functions which it has taken over and the fact that that housing co-op should be representative of the tenants of the houses.
As I understand it, if an agreement on this issue cannot be reached between the housing co-op and the local authority, the Secretary of State has powers to intervene and to force an agreement on terms which he thinks fit. In other words, the Secretary of State will be the ultimate arbiter of the terms of the agreement.
My main concern relates to the expression "housing co-operative" as it is used in the new clause. It says: 'housing co-operative' has the meaning given in subsection (1) of section 22
of the Housing (Scotland) Act 1987. In that section the housing co-op is described as
a society, company or body of trustees for the time being approved by the Secretary of State for the purposes of this section".
That definition leaves open the interpretation that the housing co-operative could exist already and may not have been formed for the tenants in that area. It leaves open the possibility that where there is a housing co-operative in one area, under the new clause it would be entitled to try to take over houses in an adjoining area which at that time belonged to the local authority.
10.30 pm
When the new clause says that the local authority must satisfy itself that the housing co-operative is
representative of the tenants of the houses",
does that mean the tenants of the houses which the housing co-operative already has, or the tenants of the houses which it may wish to take over in an adjoining area? I hope that it is the latter. Even if it is, how is the local authority to satisfy itself that the housing co-operative isrespresentative of those tenants whom it has taken over? As is made clear in the new clause, it is the housing co-operative which initiates the takeover process, not the tenants themselves.
The Minister should give us the assurance that when the process is set in train there will be consultation with the tenants individually and collectively and that before any takeover is allowed by a housing co-operative from an adjoining area or from within the area, there will have to be a ballot of the tenants affected, with a clear majority in favour of such a change. As I read it, there is nothing in new clause 16 which allows for consultation with tenants individually or collectively or for a ballot to ensure that a majority of tenants are in favour of such a change.
On the basis that it should be for the tenants to decide, not for the Secretary of State for Scotland, for a local authority or for a putative housing co-operative, the new clause would be a retrograde step for people in Scotland.
Given the serious position of homeless people, particularly in Scotland where the homeless figures are rising alarmingly, for the Scottish Office Minister to table new clauses which would take more houses away from local authorities, the only group in Scotland with a statutory requirement to house the homeless, does not seem to be a wise step. Rather than trying to weaken further the housing activities of local authorities, the Secretary of State should be presenting proposals for investment in local authority housing and for the provision of more finance to local authorities to enable them to meet the statutory requirements which he places upon them.
I should be grateful if the Minister would clarify the loose wording of new clause 16 and make it clear that only tenants living within a local authority area will have the right to form a housing co-operative such as is referred to. Equally, he should make it clear that before that happens, tenants will be consulted individually and collectively and that tenants will have the right to a ballot whose result will be binding.

Lord James Douglas-Hamilton: I can give the assurance which the hon. Gentleman seeks. In this context we are discussing management co-operatives. The concern of the hon. Gentleman seems to relate to completely different legislation about voluntary disposals. He will recall debating that across the Floor of the House in bygone years. Very strict safeguards are written in for voluntary disposals. The new clause has nothing to do with that.
As to the wording, I am reassured by the Scottish Office lawyers that the statement that
the local authority shall satisfy themselves that the housing co-operative … are representative of the tenants of the houses
means that it must be the tenants in the area concerned; it cannot be an outside body coming in. I am informed that it is clear on the face of the Bill and there is no room for dubiety on that point. If the hon. Member wishes, I shall be glad to send him the safeguards about voluntary disposals from other legislation.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New clause 8

MANAGEMENT AGREEMENTS

'( )—For section 27 of the 1985 Act (management agreements) there shall be substituted the following section—

"27.—(1) Subject to the provisions of section 27A, a local housing authority may agree that another person shall exercise as agent of the authority in relation to—

(a) such of the authority's houses as are specified in the agreement, and
(b) any other land so specified which is held for a related purpose

such of the authority's management functions as are so specified.

(2) In this Act 'management agreement' and 'manager', in relation to such an agreement, means an agreement under this section and the person with whom the agreement is made.

(3) A management agreement shall set out the terms on which the authority's functions are exercisable by the manager.

(4) A management agreement may, where the manager is a body or association, provide that the manager's functions under the agreement may be performed by a committee or sub-committee, or by an officer, of the body or association.

(5) References in this section to the management functions of a local housing authority in relation to houses or land include—

(a) functions conferred by a statutory provision, and
(b) the powers and duties of the authority as holder of an estate or interest in the houses or land in question.".'.—[Mr. Battle.]

Brought up, and read the First time

Mr. Battle: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: I understand that it will be convenient to discuss at the same time the following: New clause 9—Consultation required before management can be entered into—

'( )—For section 27A of the 1985 Act (Consultation required before management agreement can be approved) there shall be substituted the following sections—

"27A. (1) A local housing authority who propose to enter into a management agreement shall serve notice in writing on the tenant of each house to which the proposal relates informing him of—

(a) such details of their proposal as the authority consider appropriate, but including the identity of the person who is to be the manager under the agreement and the standards of service proposed to be required by the agreement
(b) the likely consequences of the agreement for the tenant, and
(c) the effect of the provisions of this section,

and informing him that he may, within such reasonable period as may be specified in the notice, make representations to the authority.

(2) The authority shall consider any representations made to them within that period and shall serve a further written notice on the tenant informing him—

(a) of any significant changes in their proposal, and
(b) that he may within such period as is specified
(which must be at least 28 days after the service of the notice) communicate to the authority his objection to the proposal,

and informing him of the effect of subsection (3) (approval to be withheld if majority of tenants are opposed).

(3) The authority shall not enter into the management agreement if it appears to them that a majority of the tenants of the houses to which the agreement relates do not wish the proposal to proceed.

(4) In the case of secure tenants the provisions of this section apply in place of the provisions of section 105 (consultation on matters of housing management) in relation to the making of a management agreement.".'.

Amendment No. 115, in clause 115, leave out lines 15 to 43.

Amendment No. 115, in clause 116, line 44, leave out from beginning to end of line 5 on page 117.

Amendment No. 116, line 13, at end insert
'and shall not enter into any agreement that has not received majority support of those tenants who have been consulted.'.

Mr. Battle: We now move to part II of the Bill, which deals with public tenancies and local authority housing. It is ironic that under part I the Government argued for giving tenants rights, but tonight they have drawn back from that, despite an assurance that was given in Committee, and have suggested that rather more was on offer at first sight than has proved to be the case.
Clauses 115 and 116, which originally were clauses 113 to 115, pave the way for the compulsory competitive tendering of housing management and remove tenants' rights to be consulted and their veto over the contracting out of the management of their homes. Under section 105 of the Housing Act 1985, tenants have the right to be consulted on all matters reflecting housing management, but the Bill removes that right in order to extend CCT. It seems that the only purpose of CCT is to remove tenants' rights.
Under section 27 and 27A of the Housing Act, a local authority may contract out any of its housing management functions only after consulting tenants and obtaining the Secretary of State's consent. Consent shall not be given if it appears that the majority of tenants are opposed. The Bill gives the Secretary of State powers to make regulations delegating arrangements for approving management agreements to local authorities and proposes to remove the requirement that a management agreement cannot be approved if a majority of tenants oppose it. We oppose that diminution in hard-won tenants' rights, because we believe that tenants should be given that primary right. We hope that the Government will not remove those passages from the Bill.
Interestingly, the rubric of clause 115 says "Management agreements" and the rubric to clause 116 says
Consultation with respect to management agreements".
I argue that the rubric should read, "rights with respect to management agreements", to enshrine tenants' rights in law. I gather that more than 100 tenants' organisations responded to the Government's consultation paper, "Competing for Quality", and all opposed the removal of their primary right to have a say in what happens to their housing management. Tenants and their organisations are clear that their rights are being taken away by the abolition of the provision for consultation that was enshrined in the 1985 Act. Surely, as users of local authority housing management services, tenants should be the final arbiters of whether CCT should benefit them. It should be up to them to take the decision about who manages their homes, because such decisions are no less important than decisions on ownership.
New clause 8 is intended completely to replace clause 115. It will allow a local authority to enter into a management agreement with some other body to manage its housing stock after consultation with tenants, individually and collectively, provided that the majority of


tenants affected are not opposed. That is intended to replace current provisions, under which the Secretary of State must give his consent to each agreement. Under the Bill, the Secretary of State may give a general consent, but the stipulation that a majority of tenants should not be opposed is effectively removed. We want to put the power back where it belongs—at local level—rather than hand more to the Secretary of State.
New clause 9 would require consultation to take place before a management agreement could be entered into. It would replace completely the existing clause 116 in order to reinstate the requirement that tenants are consulted individually on any proposed management agreement and the requirement that the agreement may not be entered into if a majority of tenants are opposed to it. It would also require the local authority to notify tenants of the identity of the proposed manager and of the terms of the agreement, a requirement which is in the existing legislation but which is to be deleted by clause 116.
We hope that the Government will respect tenants' rights. We believe that the tenants' right under the Housing Act 1985 to be consulted and to be able to veto the extension of compulsory competitive tendering for their housing management should be fundamental. We are opposed to its removal because nothing is more important to tenants than the management of their homes.
The process should be tenant-led and tenant-driven. The tenants should be involved from the outset instead of the process being Secretary of State-led. The provisions run counter to its being tenant-led and tenant-driven and they undercut tenants' rights. Under the present clauses, tenants will not necessarily have the final say in who manages their homes.
It is worth pointing out that the National Housing Forum, which brings together all the key organisations involved in promoting access to decent homes for all, said:
The Forum is deeply concerned that the Housing and Urban Development Bill contains clauses which will remove existing tenants' rights to veto the introduction of CCT to the management of their homes. It feels that tenants should be able to decide if CCT is the best option for their housing.
The National Tenants and Residents Federation, severally and individually through its member organisations, has submitted numerous petitions to the House to beg the Government to leave their primary right to a veto in statute.
One petition states:
The Humble Petition of local authority tenants of councils in England and Wales Sheweth That Section 105 of the Housing Act 1985, part of the original Tenants Charter of the Housing Act 1980, gives a most important right to council tenants in England and Wales in that it obliges their landlord authority to consult them on matters of housing management. The right of tenants to be consulted and to have their views taken into account when any subsequent decision is made is the foundation for tenant participation in housing management.
Wherefore your Petitioners pray that your honourable House: Will instruct the Government to make no amendment to reduce tenant's rights under section 105, Housing Act 1985 … and to therefore strike out
what then was
Clause 114".
The new clause would satisfy that petition. I hope that the Government will take note of it and of the fact that more than 5,000 tenants, representing tenants' organisations, petitioned the House on 3 December to let hon. Members

know exactly what they thought of proposals to reduce tenants' rights to consultation. National tenants' organisations and the National Tenants and Residents Federation have organised petitioning of the House to say that they wanted to retain that primary right.
The new clause would reinstate the right and would interpret the Government's intentions more positively. The Government offer hollow talk of the right to manage, but, in legislation, they remove rather than enhance tenants' rights. The Bill flies in the face of sentiments expressed in the tenants charter because, in practice, the Government are undermining tenants' rights.
Tenants' rights should be extended, not withdrawn. Tenants should have the final say in who manages their homes. If they are dissatisfied with the service, they should be collectively free to choose other social landlords—not only private companies—to provide an alternative.
If they are satisfied with the current service, they should be spared the costly process of tendering. In other words, any trigger for tendering should be in the hands of tenants and not in those of the Government or the Secretary of State. I hope that the Minister will accept the new clause.

Sir Teddy Taylor: I appreciate that Ministers have fought hard for an excellent Bill and have achieved a great deal against mighty odds. I congratulate them on what has been achieved, although the Bill does not go so far as some of us would wish.
I hope that the implications of the new clause will be considered carefully; we do not want it to distort what is already not a particularly level playing field. In my constituency there are a number of retirement leaseholders of properties built by McCarthy and Stone, a company of which hon. Members may have heard. These leaseholders do not have the right of consultation. Indeed, they have no rights when it comes to deciding who will manage their properties. The management company that is determined by the property developer is a subsidiary of that company.
Council tenants have the right to decide and the right also of full consultation, while retired people—innocent people who, in my view, have been taken in to some degree by private developers—do not have the right to decide. Instead, they have to accept a management company that is owned by the developer.
Tenants of council properties ar being given more and more rights, but someone who buys a retirement leasehold flat has to sign a document that states that, if he sells the property, 1 per cent. of the proceeds will be returned to the developer. The development companies have fought hard to stop the rights of retirement leaseholders being extended. They have opposed the proposal that the leaseholders should have the right to enfranchise their leaseholds, which is something for which Ministers have fought hard.
If the new clause is to be accepted, I hope that my hon. Friend the Minister will bear much in mind the persecution of retired, elderly people who are buying properties from companies such as McCarthy and Stone and who are deprived of the right to decide which company will manage their property. They are instead instructed to take on a company that is a subsidiary of the development company. The terms that are set out in their leases can be described only as oppressive.
I hope that the hon. Member for Leeds, West (Mr. Battle), who introduced the new clause so fairly and so well, will accept that there must be a level playing field. It cannot be right if one group has many justifiable rights while others have hardly any rights.
If my hon. Friend the Minister is prepared to accept the new clause, or even if he is about to say that he will consider it carefully, I hope that he will give me the simple assurance that he will examine the deprivation of rights and entitlements that is suffered by a substantial group of retired and elderly people who seem to have no one to fight for them. They seem to have been prevented from securing a fair deal. I hope that my hon. Friend the Minister will say that he will try to ensure that there will be a level playing field and that private leaseholders will be able to obtain some rights that compare with the justifiable rights of council tenants to which the hon. Member for Leeds, West referred.
Perhaps my hon. Friend will go so far as to say that he will be pleased to meet two or three representatives from developments such as Homecove house and Homeground house at Southend, where residents have fought hard to establish the rights—not great rights or privileges—that are available to every householder or tenant in other properties. If my hon. Friend is prepared to give such an assurance, there is no reason why he should not look upon the new clause with some favour.
I hope that my hon. Friend the Minister will work hard to ensure that there is a level playing field and that one group does not have all the rights while others are persecuted, deprived and exploited.

Mr. Clive Soley: It is encouraging to see the hon. Member for Southend, East (Sir T. Taylor) point so effectively to the huge hole in the middle of the Government's legislation. Of course, the Bill is not really about tenants' rights, and that is the sad aspect. My hon. Friend the Member for Leeds, West (Mr. Battle)—I gladly support his new clause—made the case for improving tenants' rights, inasmuch as the Government have gone down that road, but the real hollowness of the legislation is shown by the hon. Member for Southend, East.
Many of my hon. Friends and I have argued for years that the crucial issue is the management of rented property, regardless of to whom it belongs. If one has a bad landlord, it does not matter whether it is public, private or charity, one deserves the right to get out of its clutches. I have said on many occasions that there is nothing worse than having the power to put a private landlord in prison but still remain his tenant when he comes out of prison. That is ludicrous and wrong; it puts the tenant in an impossible position.
If the Government were seriously addressing tenants' rights, the Bill would include a provision to extend to tenants in all sectors the right to change their landlord. Council tenants, housing association tenants and private sector tenants should have the right to change their landlord. It is true that there have to be different rules for each sector and that there have to be different circumstances for each, but each case should be driven by the tenants. The tragedy and the hollowness of the 13ill is that it is driven by the Secretary of State.
The other aspect of the Bill that is so offensive and which the new clause addresses is that, to rub salt into the wound, tenants have to pay for a process that they themselves might not wish to go through. They might be

perfectly happy with their present council landlord. They might feel that it is doing a very good job. The landlord might be a Conservative council, a Labour council, or any variation in between. The tenants might be perfectly happy with what they have and might not wish to change it. As a result of the legislation, unless the new clauses are accepted, tenants will be obliged to go through a system for which they will have to pay out of their rent. That is grossly unfair. It has nothing to do with tenants' rights; it is all to do with punishing council tenants.
The hon. Member for Ealing, Acton (Sir G. Young), in a rather more surreptitious way than his predecessors adopted, is saying, "This is the way we get rid of council housing." I have always understood the Conservative party's argument, which is, "We want councils no longer to be housing managers." It is a silly argument and it is wrong in a variety of ways, but I understand it. The point is that choice should be with tenants, not with the Government, not even with the council or with anybody else.
Before the previous election, the previous Secretary of State for the Environment, Lord Ridley as he now is, was open enough to say, "I want to put an end to council housing." He was very specific about that. His aim was very explicitly stated, and it was put into practice by many Conservative councils who thought that they would try to sell off council housing. The hon. Member for Acton has moved back on that. He is recorded as saying, "Council housing will continue for many years."
The hon. Gentleman was a Minister in the early stages of the first Margaret Thatcher Government in the early 1980s. I remember when the body of the baronet and his bike were found washed up on a beach with various Tory knives sticking out of his back, with the fingerprints of Lady Macbeth of Finchley all over them. They were there because the hon. Gentleman was pursuing policies at that time in the Department of the Environment which were not regarded as in keeping with the Thatcherite policies of the time.
The wheel has moved a semicircle, and the Minister is now trying to back off from what Lord Ridley was doing, because, more than most, he recognises that it would be a disaster to get rid of council housing without replacing it. A policy of giving tenants the right to buy would have been brilliant if it had been matched by a duty to replace. One simply cannot get rid of a million houses without creating a crisis. That was one right which the Government gave.
The Government still want to get rid of council housing, but by the rather more circuitous route of putting it out to tender, in the hope that tenants will find that private management is better. In some cases, tenants will find that private management is better, although in some cases it will be worse. That is the problem.
To make tenants choose and make them pay for having the choice presented to them when they may be perfectly satisfied is not the way to recognise tenants' rights. It is also profoundly dangerous. I like new clause 9 because it will ensure that tenants are properly informed.
The Minister is wise after the event. Perhaps he knew at the time the danger that the Government were getting into when they allowed tenants the right to buy in blocks of flats that needed major repairs. We now have the horrendous scene about which the Labour party warned the Government for many years. If we had pepper potting, as it is called, in council blocks that needed a lot of money


spent on them, tenants who bought flats would face horrendous bills. That is precisely what happened in Labour and Tory boroughs and elsewhere.
The only way out of the trap is to allow local authorities to buy back. The hon. Members for Battersea (Mr. Bowis) and for Croydon, Central (Sir P. Beresford), who are looking quizzically at each other, should feel more guilty about the matter than anyone else because the policies in Wandsworth aggravated the housing problem in that area.
If we are talking seriously about tenants' rights—as we should be—we should at the very least support the new clauses. We need to go much further. We need to say that the quality of the management of one's home matters more than almost anything else. Rent levels, tenants' right and quality of management are what should drive any rented policy. Nothing else should matter. I am not fussed about ownership.
If tenants have a bad landlord, they must get shot of him, no matter who it is. If tenants have a good landlord, they do not want the hassle and expense of management of their housing going to tender and then to some other organisation which they do not especially want. Tenants may not want any change but they must go through the system because they have no choice. Tenants must put their hands in their pockets and pay their money for something which they do not want and which might end up being a lot worse. The local authority must then accept the change if the new landlord puts in the lowest tender and meets certain other criteria. That is totally unacceptable because the tenant might not want it that way.
We are not talking about tenants' rights: we are talking about another attempt to push council tenants out of council control without having any clear policy or strategy other than a slight reversal of the recommendations and policy which were put forward so clearly and powerfully —although I strongly disagree with them—by Lord Ridley. Lord Ridley was clear in what he wanted to achieve. The Minister is still not clear. He is saying that he wants council housing to continue, but he is putting enough blocks on the possibility of making it work effectively to push it out of that sector. If he were pushing tenants into better management and lower rents, I would say that it was terrific, but he is not.
The tenants in the hon. Gentleman's constituency of Ealing, Acton should have had a choice of a housing manager who did not put up their rents by £30 per week. The Conservative council in Ealing put up rents by £30 per week. [Interruption.] It is no good the Minister muttering from a sedentary position that it was because of a Labour party policy. It was not a Labour party policy. It was a clear and determined effort by the Conservative council. No other council in the country found it necessary to increase rents by that amount.

Sir George Young: rose—

Mr. Soley: I shall give way shortly. The reason why Ealing council did it that way was because it wanted to put the burden on tenants when it could have done what most local authorities did, which was spread the burden.

Sir George Young: rose—

Mr. Soley: I shall give way. I simply want to ensure that the Minister makes the right intervention. I am looking forward to this and I want to get it wound up suitably.
The issue for Ealing council was to spread the burden in such a way that the tenants had to take most of the burden, instead of other people. Hon. Members should remember that the reason why rents increased around the country generally was because of the Government's directive in terms of the other subsidy given to councils.

Sir George Young: I am afraid that this has very little to do with the new clause, but the hon. Gentleman has pushed his luck. If he reads the district auditor's report on Ealing, he will find that rents went up in Ealing because of the creative accountancy of a Labour administration that borrowed, knowing perfectly well that the debts would not have to be repaid until after the borough elections. It is there in black and white in the district auditor's report.

Mr. Deputy Speaker: Order. We have heard enough about Ealing.

Mr. Soley: I respect what you are saying, Mr. Deputy Speaker, but Ealing is relevant to tenants' rights. To some extent, tenants have the right to determine rents. Problems arise if a council deliberately puts up rents. The audit was irrelevant as the decision was taken to put all the burden on to the tenants and not on to the ratepayers. The increase came from the Government.
11 pm
All good councils and housing associations discuss rent increases with their tenants. Under the new clause, tenants would lose that influence over a new competitive tenderer. A competitive tenderer may take over in Ealing and put up rents again with minimal consultation. Whether we are talking about a Conservative council such as Ealing or a company that takes over the properties after putting in a low bid, the tenants' rights are lost. That is why all the tenants' organisations have written to hon. Members on both sides of the House pointing out that tenants were losing their rights. That should not be happening.
What the Minister knows in his heart is necessary, but what, because of his party's ideological position, he cannot deliver, is a proper reform that gives tenants in the private sector, the public sector, housing associations and charitable groups the right to get rid of a bad landlord. We need nothing more.

Mr. Denham: I thought that the speech of the hon. Member for Southend, East (Sir T. Taylor) was important. It was rather surprising to hear about problems in the private sector due to changes of landlord in the context of the new clause, but the hon. Gentleman was absolutely right to say that the principle should be extended. I hope that the Minister was not sitting on the Front Bench wondering why we were talking about McCarthy and Stone properties when we should be talking about council tenants. There may be some lessons to be learned from what has happened in that part of the private sector, in the plans that the Minister appears to have, according to recent newspaper articles.
If in future private building companies will be able to bid for Housing Corporation funds to undertake the development of social housing, it is likely that the situation in respect of retirement properties for private sector tenants will affect ordinary families who rent properties built by private sector companies.
The Financial Times tells us that the Minister is being pushed by groups of London Tory Members. I hope that any move in that direction is backed from the start with an absolute cast-iron guarantee that any tenants of properties created in that manner have the right to choose their landlords from the outset. If they do not, the imbalance between what is now proposed for council tenants and those in the private sector or the housing association movement will become even more stark.
We have heard some comments about the strategic issues, but we should rehearse the reasons why tenants believe that they should have the right to veto any change in management. I am sure that we will hear from the Minister, as we did in Committee, about all the different stages of consultation in which tenants will have an opportunity to contribute to the CCT process, but the Government must accept that whatever the involvement in consultation, it is no substitute for a say in the final decision as to who gets the contract to manage their homes. That is not an ideological position. It comes from the experience of tenants and the way in which they see their properties being managed. Fundamentally, it comes down to one of the great problems in competitive tendering.
It is possible to write into a specification physical and specific items that can be measured. But aspects of management or of public service such as the attitude, outlook, manner and caring nature of staff are impossible to include in a written specification with any degree of certainty about what will be produced.
When tenants look at the management of their estates, they can reasonably specify the time that it should take to have a repair done and the efficiency with which it is done and that it should be done to the tenant's satisfaction. They can check whether that has been achieved. They can state that there must be a local housing office and specify its opening hours and that it must run an appointments system. Standards can be set and monitored for ground maintenance. The physical and specific elements of a competitive tendering contract can be written down.
However, it is not possible satisfactorily to write into a specification for a tender for housing management, for example, how housing officers resolve disputes between neighbours and the extent to which they show care and sensitivity in bringing together neighbours with a variety of conflicts to resolve disputes with the least pain to each party. It is not possible to specify matters such as whether staff take the time to listen to elderly or inarticulate people who take some time to describe their problem.
Tenants need to know not just the efficiency with which rent arrears are chased but the sensitivity with which debt problems and financial difficulties will be understood and worked through. Tenants should be supported so that the local authority receives its rent but the tenants' financial difficulties are not exacerbated by being forced to go to private moneylenders or find other ways of raising the money.
Those aspects of the quality of local authority management or any housing management are likely to be as important to tenants as the physical and specific matters which can easily be written down. It will be on non-specific matters that tenants will want to have the final say.
As the Bill is drafted at present, not only will tenants not have a right of veto but they will not know who is likely to take over the running of their homes. They may know who is competing for the contract, but they will

certainly not have a veto on who takes over. At best, the only information that the tenants will have towards the closing stage of the tendering process will be the physical and specific parts of the contract specification and the price. They will not be able to check out the management style and human approach of those who will be responsible day to day for the quality of the management of their homes. That is why tenants throughout Britain are so angry about what the Government are doing.
There are great strengths in public sector management in specifying performance levels and creating a division between those who are responsible for specifying the quality of service that should be provided and those who provide it. That is why many of the better-run authorities were introducing such specifications for the in-house management of their local housing offices and housing management services, well before CCT appeared on the agenda. It is an excellent way of telling tenants what the council proposes to achieve.
It is insupportable that the management should be changed to a different organisation or new company without allowing the tenants to veto the choice of organisation, if they are not happy about it. The House knows that there is only one reason why the Government have chopped the tenants' veto out of the Bill. It is because they believe that such a veto would be a disincentive to competition from the private sector. There is no democratic basis for removing the veto. There is no argument of good housing management.
The Government have simply been told by private sector management companies that they would not be interested in putting in bids if they felt that the tenants would have the opportunity to reject them if they did not like the service that was on offer. That may be a disadvantage to the ideologically motivated Conservative Members who are determined to drive private sector management into public sector housing, but I do not believe that it is any basis for overruling straightforward democratic rights for council tenants in the way the Government propose, and I hope that tonight the rights can be restored by acceptance of the new clause.

Sir George Young: This has been a fascinating debate with a substantial number of misunderstandings littering it. One misunderstanding which the hon. Member for Hammersmith (Mr. Soley) mentioned was that somehow Baroness Thatcher and I did not get on. We got on very well indeed. We got on so well that she put me in her Administration not once, but twice—an honour not extended to many other people.
The other misunderstanding was that Labour Members do not seem to understand what the shadow Secretary of State is up to. A few moments ago we heard that he was prepared to trade in their objections to the tenants' veto if we would simply abolish the low rent test. That is exactly what he said. While we had all these objections to compulsory competitive tendering, the hon. Member for Blackburn wrote an article in Tribune in which he said:
The wide acceptance between contractor and provider that CCT has produced has been sensible
All those debates in Standing Committee about not liking compulsory competitive tendering have been swept aside by the aggressive, forward-looking shadow Secretary of State who failed to take his team into his confidence.

Mr. Denham: I do not have the advantage of having seen the Tribune article, but I will read it. My contribution


recognised that a division between the part of an authority responsible for specifying the standard of service and that responsible for delivering the quality and meeting the specifications is a perfectly good management tool and if that is what my hon. Friend the Member for Blackburn was recognising, I welcome it.

Sir George Young: I am quite happy to make available the Tribune article, headed, "Jack Straw, New Radical". I hope that the hon. Member will accept that one cannot get CCT for housing management and the tenant veto. The two are incompatible. It is either compulsory competitive tendering or we have a tenants' veto. We cannot have both.

Mr. Battle: Does not the Minister accept that the real dilemma and incompatibility is the Government arguing that tenants can have their rights and at the same time foisting CCT on them?

Sir George Young: I shall come in a moment to tenants' rights. The hon. Member, I am sure unwittingly, misled the House when he said that tenants would no longer be consulted and that we were going to take away their right to have a say. I wrote it down. Those were his very words. If he looks at page 116 of the Bill he will see exactly what rights tenants are being given which make it clear that they will be consulted and will have a say.

Mr. Battle: Will the Minister accept that his Bill removes the tenants' right to veto? Is that true or not?

Sir George Young: Right. Let me address directly the whole question of tenants' rights. The Bill gives tenants a right to manage, a right undreamed of by Labour when it was in power. Tenants will have a right to take over management of their estate. They will not be dependent on a local authority, which has been the position. They will not be dependent on a local authority giving away or subcontracting that right. They will have a right to manage their estates. It was not a right that the hon. Member mentioned in his speech at all.
We had this debate at length in Standing Committee. At present, tenants have a right of veto. We are proposing much more meaningful rights which involve tenants in the whole process of drawing up the specifications of the contract, interviewing the contractors, and monitoring it. If the hon. Member is interested in tenant involvement and tenant power, there is far more in the Bill than a simple crude veto at the end of the process. We are now discussing with tenants the new rights that are enshrined in the Bill and there is an appetite among tenants for the rights extended to them in the Bill.

Mr. Raynsford: What is the tenants' view? The Minister talks of the more sophisticated rights, but he does not mention their simple democratic right to have a final say over who will manage their homes. What have tenants told the Minister's Department? Do they want to keep that democratic right or not?

Sir George Young: Tenants throughout the country are anxious to have the right to manage their estates and the Bill gives them that right. They are also interested in the real rights conferred on them by the Bill to draw up the specifications of the contracts for their estates. They do not have that right now. They have no right to interview the

contractors, or to monitor how well the contractors do. Those rights, which the Bill extends to tenants, are far more meaningful than the right to a crude yes or no when the local authority has drawn up the specifications without talking to tenants, and has chosen the contractors without consulting them. Hon. Members who tour the local authority estates will find that, under the present Government, there are more estate management boards and tenant management co-operatives than ever existed when Labour was in power. Tenants have a real appetite for reform and change.
11.15 pm
The Opposition's amendments try to perpetuate the ideas of a bygone age—an age of centralist bureaucracies, when local authorities told tenants what they intended to do. That is not the way in which to manage public housing in the 1990s, or in the 21st century. The way forward lies in close, meaningful consultation with tenants from the outset, building partnership and trust, and that is what the Government propose. I urge the House not to accept the new clause. [Interruption.]

Mr. Deputy Speaker (Mr. Michael Morris): Order. The hon. Member for Cardiff, West (Mr. Morgan) must contain himself. If he wants to intervene and the Minister gives way, that is fair enough.
I assume that the Minister has finished his speech. I call Mr. Battle.

Mr. Battle: With the leave of the House, Mr. Deputy Speaker.
The Minister mentioned extending tenants' rights and to their having a say in the drawing up of contracts; but he did not give tenants the primary right to say yes or no to the contract itself. What is more, the tenants now have to pay for the whole process, even if, at the end of the day, they are against it.
I am tempted to press the Minister. I may be wrong, but was he not the Parliamentary Under-Secretary for the Environment when the Housing Act 1985 was passed? Was section 27A of that Act an aberration? Did not the Government argue then that they were giving tenants rights? If so, why do they now feel that they should remove those rights? They cannot have it both ways. They are promoting measures that deal specifically with the removal of a right enshrined in the 1985 Act—the primary right to veto, allowing power to remain with the tenants. The Government want to foist CCT on local authorities.
In Committee, the Minister made it clear that the initiative would be Secretary of State-led or local authority-led, but it certainly would not be tenant-led. We should be considering the issue from that angle, not from the angle that the Government are presenting.

Mr. Soley: My hon. Friend has made a powerful point. The Minister is going back on what the Government did before. Has my hon. Friend also noticed, however, that the Minister did not answer the hon. Member for Southend, East (Sir T. Taylor)? As he and I have both pointed out, an incredible situation now obtains: tenants can have a bad landlord in prison who cannot be changed, and can be made to change a very good landlord whom they do not want to change.

Mr. Battle: My hon. Friend has made a telling point —as, indeed, he did in his speech. The Government purport to offer people rights when it suits them, but they


step back when we ask for those rights to apply across the board. We have already observed their attitude to the rights of leaseholders who want enfranchisement.
Let me conclude by quoting the words of Cora Carter, secretary of the National Federation of Tenants, who is a tenant from Huddersfield:
The Government talks of extending tenants' rights, but when you look at the Bill, it is taking them away. Tenants should he consulted on all aspects of housing management.
We would add that tenants should have real rights, not references to rights in charters which are fundamentally undermined in proposed legislation. I urge hon. Members to support the new clause.

Question put, That the clause be read a Second time:—

The House divided: Ayes 75, Noes 220.

Division No. 147]
[11.19 pm


AYES


Adams, Mrs Irene
Jackson, Helen (Shef'ld, H)


Alton, David
Jones, Lynne (B'ham S O)


Barnes, Harry
Jones, Nigel (Cheltenham)


Battle, John
Kirkwood, Archy


Betts, Clive
Lewis, Terry


Boyce, Jimmy
Lloyd, Tony (Stretford)


Boyes, Roland
Llwyd, Elfyn


Byers, Stephen
Loyden, Eddie


Campbell, Mrs Anne (C'bridge)
McAllion, John


Campbell, Menzies (Fife NE)
McAvoy, Thomas


Cann, Jamie
McCartney, Ian


Chisholm, Malcolm
Mahon, Alice


Coffey, Ann
Martin, Michael J. (Springburn)


Cohen, Harry
Meale, Alan


Connarty, Michael
Michael, Alun


Cousins, Jim
Morgan, Rhodri


Cryer, Bob
Murphy, Paul


Cunliffe, Lawrence
Pickthall, Colin


Cunningham, Jim (Covy SE)
Pike, Peter L.


Dalyell, Tam
Powell, Ray (Ogmore)


Denham, John
Prentice, Ms Bridget (Lew'm E)


Dixon, Don
Prentice, Gordon (Pendle)


Donohoe, Brian H.
Raynsford, Nick


Dunnachie, Jimmy
Reid, Dr John


Etherington, Bill
Salmond, Alex


Ewing, Mrs Margaret
Simpson, Alan


Foster, Derek (B'p Auckland)
Skinner, Dennis


Foster, Don (Bath)
Smith, Andrew (Oxford E)


Gerrard, Neil
Soley, Clive


Godman, Dr Norman A.
Spearing, Nigel


Griffiths, Nigel (Edinburgh S)
Taylor, Mrs Ann (Dewsbury)


Griffiths, Win (Bridgend)
Vaz, Keith


Hall, Mike
Wigley, Dafydd


Hanson, David
Wise, Audrey


Henderson, Doug
Wray, Jimmy


Hinchliffe, David



Howarth, George (Knowsley N)
Tellers for the Ayes:


Hughes, Kevin (Doncaster N)
Mr. Gordon McMaster and


Hughes, Simon (Southwark)
Mr. Peter Kilfoyle.


Jackson, Glenda (H'stead)





NOES


Ainsworth, Peter (East Surrey)
Biffen, Rt Hon John


Aitken, Jonathan
Body, Sir Richard


Alexander, Richard
Bonsor, Sir Nicholas


Allason, Rupert (Torbay)
Booth, Hartley


Amess, David
Boswell, Tim


Ancram, Michael
Bowden, Andrew


Arbuthnot, James
Bowis, John


Arnold, Jacques (Gravesham)
Brandreth, Gyles


Atkinson, David (Bour'mouth E)
Brazier, Julian


Baker, Rt Hon K. (Mole Valley)
Bright, Graham


Baker, Nicholas (Dorset North)
Brooke, Rt Hon Peter


Baldry, Tony
Brown, M. (Brigg & Cl'thorpes)


Banks, Matthew (Southport)
Browning, Mrs. Angela


Bates, Michael
Burns, Simon


Batiste, Spencer
Butcher, John


Bendall, Vivian
Butler, Peter


Beresford, Sir Paul
Butterfill, John





Carlisle, John (Luton North)
Knight, Mrs Angela (Erewash)


Carlisle, Kenneth (Lincoln)
Knight, Greg (Derby N)


Carrington, Matthew
Knox, David


Carttiss, Michael
Lait, Mrs Jacqui


Chaplin, Mrs Judith
Lamont, Rt Hon Norman


Clappison, James
Lang, Rt Hon Ian


Clarke, Rt Hon Kenneth (Ruclif)
Lawrence, Sir Ivan


Clifton-Brown, Geoffrey
Legg, Barry


Colvin, Michael
Leigh, Edward


Congdon, David
Lidington, David


Conway, Derek
Lightbown, David


Coombs, Anthony (Wyre For'st)
Lilley, Rt Hon Peter


Coombs, Simon (Swindon)
Lloyd, Peter (Fareham)


Cope, Rt Hon Sir John
Lord, Michael


Couchman, James
Luff, Peter


Cran, James
Lyell, Rt Hon Sir Nicholas


Currie, Mrs Edwina (S D'by'ire)
MacGregor, Rt Hon John


Davies, Quentin (Stamford)
Maclean, David


Davis, David (Boothferry)
McLoughlin, Patrick


Day, Stephen
Maitland, Lady Olga


Devlin, Tim
Major, Rt Hon John


Dorrell, Stephen
Malone, Gerald


Douglas-Hamilton, Lord James
Mans, Keith


Dover, Den
Martin, David (Portsmouth S)


Duncan, Alan
Mawhinney, Dr Brian


Duncan-Smith, Iain
Merchant, Piers


Dunn, Bob
Milligan, Stephen


Durant, Sir Anthony
Mills, Iain


Dykes, Hugh
Mitchell, Andrew (Gedling)


Eggar, Tim
Moate, Sir Roger


Elletson, Harold
Molyneaux, Rt Hon James


Emery, Rt Hon Sir Peter
Montgomery, Sir Fergus


Evans, David (Welwyn Hatfield)
Needham, Richard


Evans, Jonathan (Brecon)
Neubert, Sir Michael


Evans, Nigel (Ribble Valley)
Nicholls, Patrick


Evans, Roger (Monmouth)
Nicholson, David (Taunton)


Faber, David
Nicholson, Emma (Devon West)


Fabricant, Michael
Norris, Steve


Fairbairn, Sir Nicholas
Onslow, Rt Hon Sir Cranley


Fenner, Dame Peggy
Oppenheim, Phillip


Fishburn, Dudley
Page, Richard


Forman, Nigel
Paice, James


Forsyth, Michael (Stirling)
Patnick, Irvine


Forth, Eric
Pattie, Rt Hon Sir Geoffrey


Fowler, Rt Hon Sir Norman
Pickles, Eric


Fox, Dr Liam (Woodspring)
Porter, David (Waveney)


Freeman, Roger
Rathbone, Tim


French, Douglas
Redwood, John


Gale, Roger
Richards, Rod


Garel-Jones, Rt Hon Tristan
Robathan, Andrew


Gillan, Cheryl
Roberts, Rt Hon Sir Wyn


Goodson-Wickes, Dr Charles
Robertson, Raymond (Ab'd'n S)


Grant, Sir Anthony (Cambs SW)
Robinson, Mark (Somerton)


Greenway, John (Ryedale)
Rowe, Andrew (Mid Kent)


Griffiths, Peter (Portsmouth, N)
Ryder, Rt Hon Richard


Hague, William
Sackville, Tom


Hamilton, Rt Hon Archie (Epsom)
Sainsbury, Rt Hon Tim


Hanley, Jeremy
Scott, Rt Hon Nicholas


Hargreaves, Andrew
Shaw, David (Dover)


Hawkins, Nick
Shaw, Sir Giles (Pudsey)


Hawksley, Warren
Shephard, Rt Hon Gillian


Heald, Oliver
Shepherd, Colin (Hereford)


Heathcoat-Amory, David
Skeet, Sir Trevor


Hendry, Charles
Smith, Sir Dudley (Warwick)


Horam, John
Smith, Tim (Beaconsfield)


Howard, Rt Hon Michael
Soames, Nicholas


Hughes Robert G. (Harrow W)
Speed, Sir Keith


Hunt, Rt Hon David (Wirral W)
Spencer, Sir Derek


Hunt, Sir John (Ravensbourne)
Spicer, Sir James (W Dorset)


Hunter, Andrew
Spicer, Michael (S Worcs)


Hurd, Rt Hon Douglas
Spring, Richard


Jenkin, Bernard
Sproat, Iain


Johnson Smith, Sir Geoffrey
Squire, Robin (Hornchurch)


Jones, Gwilym (Cardiff N)
Steen, Anthony


Jones, Robert B. (W Hertfdshr)
Stephen, Michael


Jopling, Rt Hon Michael
Stern, Michael


Kellett-Bowman, Dame Elaine
Streeter, Gary


Key, Robert
Sweeney, Walter


Kirkhope, Timothy
Sykes, John


Knapman, Roger
Tapsell, Sir Peter






Taylor, Ian (Esher)
Wardle, Charles (Bexhill)


Taylor, John M. (Solihull)
Waterson, Nigel


Taylor, Sir Teddy (Southend, E)
Wells, Bowen


Temple-Morris, Peter
Wheeler, Rt Hon Sir John


Thompson, Patrick (Norwich N)
Whittingdale, John


Thurnham, Peter
Widdecombe, Ann


Townend, John (Bridlington)
Willetts, David


Townsend, Cyril D. (Bexl'yh'th)
Winterton, Mrs Ann (Congleton)


Trend, Michael
Wood, Timothy


Twinn, Dr Ian
Yeo, Tim


Viggers, Peter
Young, Sir George (Acton)


Waldegrave, Rt Hon William



Walden, George
Tellers for the Noes:


Waller, Gary
Mr. Andrew MacKay and


Ward, John
Mr. Sydney Chapman.

Question accordingly negatived.

Clause 92

LANDLORD'S NOTICE OF PURCHASE PRICE AND OTHER MATTERS

Amendment made: No. 80, in page 94, line 25, leave out 'multiplier' and insert 'relevant amount and multipliers'.

Clause 95

RIGHT TO ACQUIRE ON RENT TO MORTGAGE TERMS

Amendments made: No. 81, in page 97, leave out lines 5 to 15.

No. 82, in page 97, leave out lines 19 to 26 and insert—

'(3A) Where, in the case of a dwelling-house which is a house, the weekly rent at the relevant time did not exceed the relevant amount, the minimum initial payment shall be determined by the formula—

P=R x M

where—

P = the minimum initial payment;

R= the amount of the weekly rent at the relevant time;

M = the multiplier which at that time was for the time being declared by the Secretary of State for the purposes of this subsection.

(3B) Where, in the case of a dwelling-house which is a house, the weekly rent at the relevant time exceeded the relevant amount, the minimum initial payment shall be determined by the formula—

P=Q+(E x M)

where—

P=the minimum initial payment;

Q=the qualifying maximum for the year of assessment which included the relevant time;

E=the amount by which the weekly rent at that time exceeded the relevant amount;

M=the multiplier which at that time was for the time being declared by the Secretary of State for the purposes of this subsection.

(3C) The minimum initial payment in respect of a dwelling-house which is a flat is 80 per cent. of the amount which would be the minimum initial payment in respect of the dwelling-house if it were a house.

(4) The relevant amount and multipliers for the time being declared for the purposes of this section shall be such that, in the case of a dwelling-house which is a house, they will produce a minimum initial payment equal to the capital sum which, in the opinion of the Secretary of State, could be raised on a 25 year repayment mortgage in the case of which the net amount of the monthly mortgage payments was equal to the rent at the relevant time calculated on a monthly basis.".

No. 83, in page 97, line 37, after 'section' insert—
'net amount', in relation to monthly mortgage payments,means the amount of such payments after deduction of tax under section 369 of the Income and Corporation Taxes Act 1988 (mortgage interest payable under deduction of tax);
'qualifying maximum' means the qualifying maximum

defined in section 367(5) of that Act (limit on relief for interest on certain loans);
'relevant amount' means the amount which at the relevant time was for the time being declared by the Secretary of State for the purposes of this section;
'relevant time' means the time of the service of the landlord's notice under section 146 (landlord's notice admitting or denying right);".

Clause 97

LANDLORD'S NOTICE ADMITTING OR DENYING RIGHT

Amendment made: No. 84, in page 98, line 24, leave out 'mulitiplier' and insert 'relevant amount and multipliers'.—[Mr. Baldry.]

Clause 105

MORTGAGE FOR SECURING REDEMPTION OF LANDLORD'S SHARE

Amendment made: No. 85, in page 103, line 13, leave out 'to (5)' and insert 'and (4)'.

No. 86, in page 103, line 18, leave out from beginning to end of line 7 on page 104 and insert—

'(3) The following, namely—

(a) any advance which is made otherwise than for the purpose mentioned in subsection (2) and is secured by a legal charge having priority to the mortgage, and
(b) any further advance which is so secured,

shall rank in priority to the mortgage if, and only if, the landlord by written notice served on the institution concerned gives its consent; and the landlord shall so give its consent if the purpose of the advance or further advance is an approved purpose.

(4) The landlord may at any time by written notice served on an approved lending institution postpone the mortgage to any advance or further advance which—

(a) is made to the tenant by that institution, and
(b) is secured by a legal charge not having priority to the mortgage:

and the landlord shall serve such a notice if the purpose of the advance or further advance is an approved purpose.'

No. 87, in page 104, line 17, at end insert—

'(6A) The approved purposes for the purposes of this section are—

(a) to enable the tenant to make an interim or final payment,
(b) to enable the tenant to defray, or to defray on his behalf, any of the following—

(i) the cost of any works to the dwelling-house,
(ii) any service charge payable in respect of the dwelling-house for works, whether or not to the dwelling-house, and
(iii) any service charge or other amount payable in respect of the dwelling-house for insurance, whether or not of the dwelling-house, and

(c) to enable the tenant to discharge, or to discharge on his behalf, any of the following—

(i) so much as is still outstanding of any advance or further advance which ranks in priority to the mortgage,
(ii) any arrears of interest on such an advance or further advance, and
(iii) any costs and expenses incurred in enforcing payment of any such interest, or repayment (in whole or in part) of any such advance or further advance.

(6B) Where different parts of an advance or further advance are made for different purposes, each of those parts shall be regarded as a separate advance or further advance for the purposes of this section.'

Clause 107

REPAYMENT OF DISCOUNT ON EARLY DISPOSAL

Amendments made: No. 88, in page 105, line 31 [Clause 107], leave out 'to (2C)' and insert 'and (2B)'.

No. 89, in page 106, leave out lines 1 to 37 and insert—'

'(2A) The following, namely—

(a) any advance which is made otherwise than for the purpose mentioned in paragraph (a) or (b) of subsection (2) and is secured by a legal charge having priority to the charge taking effect by virtue of this section, and
(b) any further advance which is so secured, shall rank in priority to that charge if, and only if, the landlord by written notice served on the institution concerned gives its consent; and the landlord shall so give its consent if the purpose of the advance or further advance is an approved purpose.

(2B) The landlord may at any time by written notice served on an approved lending institution postpone the charge taking effect by virtue of this section to any advance or further advance which—

(a) is made to the tenant by that institution, and
(b) is secured by a legal charge not having priority to that charge;

and the landlord shall serve such a notice if the purpose of the advance or further advance is an approved purpose."

(4) After subsection (4) of that section there shall be inserted the following subsections—

"(4A) The approved purposes for the purposes of this section are—

(a) to enable the tenant to make an interim or final payment,
(b) to enable the tenant to defray, or to defray on his behalf, any of the following—

(i) the cost of any works to the dwelling-house,
(ii) any service charge payable in respect of the dwelling-house for works, whether or not to the dwelling-house, and
(iii) any service charge or other amount payable in respect of the dwelling-house for insurance, whether or not of the dwelling house, and

(c) to enable the tenant to discharge, or to discharge on his behalf, any of the following—

(i) so much as is still outstanding of any advance or further advance which ranks in priority to the charge taking effect by virtue of this section,
(ii) any arrears of interest on such an advance or further advance, and
(iii) any costs and expenses incurred in enforcing payment of any such interest, or repayment (in whole or in part) of any such advance or further advance.

(4B) Where different parts of an advance or further advance are made for different purposes, each of those parts shall be regarded as a separate advance or further advance for the purposes of this section.".'

Clause 118

VOLUNTARY DISPOSALS BY LOCAL AUTHORITIES

Amendments made: No. 91, in page 118, line 29 [Clause 118], leave out 'to (2C)' and insert 'and (2B)'.

No. 92, in page 118, line 35, leave out from beginning to end of line 22 on page 119 and insert—

'"(2A) The following, namely—

(a) any advance which is made otherwise than for the purpose mentioned in subsection (2)(b) and is secured by a legal charge having priority to the charge taking effect by virtue of this section, and
(b) any further advance which is so secured,

shall rank in priority to that charge if, and only if, the local authority by written notice served on the institution concerned gives their consent; and the local authority shall so give their consent if the purpose of the advance or further advance is an approved purpose.

(2B) The local authority may at any time by written notice served on an approved lending institution postpone the charge taking effect by virtue of this section to any advance or further advance which—

(a) is made to the purchaser by that institution, and
(b) is secured by a legal charge not having priority to that charge;

and the local authority shall serve such a notice if the purpose of the advance or further advance is an approved purpose."

(2) After subsection (4) of that section there shall be inserted the following subsections—

"(5) The approved purposes for the purposes of this section are—

(a) to enable the purchaser to defray, or to defray on his behalf, any of the following—

(i) the cost of any works to the house,
(ii) any service charge payable in respect of the house for works, whether or not to the house, and
(iii) any service charge or other amount payable in respect of the house for insurance, whether or not of the house, and

(b) to enable the purchaser to discharge, or to discharge on his behalf, any of the following—

(i) so much as is still outstanding of any advance or further advance which ranks in priority to the charge taking effect by virtue of this section,
(ii) any arrears of interest on such an advance or further advance, and
(iii) any costs and expenses incurred in enforcing payment of any such interest, or repayment (in whole or in part) of any such advance or further advance.

(6) Where different parts of an advance or further advance are made for different purpses, each of those parts shall be regarded as a separate advance or further advance for the purposes of this section.".'

Clause 119

VOLUNTARY DISPOSALS BY HOUSING ASSOCIATIONS

Amendments made: No. 93, in page 119, line 26 [Clause 119], leave out 'to (2C)' and insert 'and (2B)'.

No. 94, in page 119, line 32, leave out from beginning to end of line 18 on page 120 and insert—

'(2A) The following, namely—

(a) any advance which is made otherwise than for the purpose mentioned in sub-paragraph (2)(b) and is secured by a legal charge having priority to the charge taking effect by virtue of this paragraph, and
(b) any further advance which is so secured,

shall rank in priority to that charge if, and only if, the housing association by written notice served on the institution concerned gives its consent; and the housing association shall so give its consent if the purpose of the advance or further advance is an approved purpose.

(2B) The housing association may at any time by written notice served on an approved lending institution postpone the charge taking effect by virtue of this paragraph to any advance or further advance which—

(a) is made to the purchaser by that institution, and
(b) is secured by a legal charge not having priority to that charge;

and the housing association shall serve such a notice if the purpose of the advance or further advance is an approved purpose.".'

No. 95, in page 120, leave out lines 21 and 22 and insert—

'''(5) The approved purposes for the purposes of this paragraph are—

(a) to enable the purchaser to defray, or to defray on his behalf, any of the following—

(i) the cost of any works to the house,
(ii) any service charge payable in respect of the house for works, whether or not to the house, and


(iii) any service charge or other amount payable in respect of the house for insurance, whether or not of the house, and

(b) to enable the purchaser to discharge, or to discharge on his behalf, any of the following—

(i) so much as is still outstanding of any advance or further advance which ranks in priority to the charge taking effect by virtue of this paragraph,
(ii) any arrears of interest on such an advance or further advance, and
(iii) any costs and expenses incurred in enforcing payment of any such interest, or repayment (in whole or in part) of any such advance or further advance;

and in this sub-paragraph 'service charge' has the meaning given by section 621A of the Housing Act 1985.

(6) Where different parts of an advance or further advance are made for different purposes, each of those parts shall be regarded as a separate advance or further advance for the purposes of this paragraph.".'—[Mr. Baldry.]

Clause 127

RENT TO LOAN SCHEME: RELATED AMENDMENTS

Amendment made: No. 101, in page 133, line 18, at end insert—

'( ) In section 71, in subsection (1)(d), after "63(2)" there shall be inserted "or (3)".'.—[Mr. Baldry.]

Clause 131

RIGHT TO COMPENSATION FOR IMPROVEMENTS

Amendment made: No. 102, in page 138, line 5, after 'when', insert '(i)'.

No. 103, in page 138, line 10, at end insert—

'(ii) there is a change of landlord;
(iii) it is assigned to a new tenant.'.—[Mr. Baldry.]

Clause 111

NEW RIGHTS WITH RESPECT TO SUCH DISPOSALS

Amendment made: No. 90, in page 114, line 2, at end insert—
'and any reference to a block of flats specified in a notice under section 84(2) above is a reference to a block each of the flats in which is so specified.'—[Mr. Baldry.]

Clause 136

FURTHER PROVISION AS TO ALLOCATION OF HOUSING

Amendment made: No. 104, in page 141, line 32, after 'housing', insert
', or of housing in respect of which the local authority may nominate the tenant,'.—[Mr. Baldry.]

Clause 138

OTHER AMENDMENTS OF 1987 ACT

Amendments made: No. 105, in page 142, line 14, after'(price)', insert '(a)'.

No. 110, in page 142, line 11 after '(1)', insert—
'In section 17 of the 1987 Act (management of local authority houses), in subsection (1), the words "and exercised by" shall cease to have effect.

(2) .'.

No. 111, in page 142, line 11, leave out 'the 1987' and insert 'that'.

No. 106, in page 142, line 15, at end insert—
'(b) after subsection (3) there shall be inserted—
(3A) There shall be deducted from the discount an amount equal to—

(a) any previous discount, or the aggregate of any previous discounts, received by—

(i) the tenant;
(ii) the tenant's spouse (including a person living with him as if they were husband and wife), if living with him at the time of the purchase in relation to which the discount is being claimed;
(iii) a deceased spouse or person mentioned in paragraph (ii), if living with the tenant at the time of death;
(iv) any joint purchaser of the house, on any previous exercise of the right to purchase a house under this Part or under Part V of the Housing Act 1985; less

(b) any amount of such previous discount recovered under section 72 or under section 155 of the Housing Act 1985.".'. —[Mr. Baldry.]

Further consideration adjourned.—[Mr. Chapman.]

To be further considered tomorrow.

NOISE AND STATUTORY NUISANCE BILL [Money]

Queen's Recommendation having been signified—

Question put and agreed to.

Resolved,

That, for the purposes of any Act resulting from the Noise and Statutory Nuisance Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable out of money so provided under any other enactment.—[Mr. Sackville.]

MEDICINES INFORMATION BILL [Money]

Queen's Recommendation having been signified—

Question put and agreed to.

Resolved,

That, for the purposes of any Act resulting from the Medicines Information Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenses of a Minister of the Crown in consequence of the Act.—[Mr. Sackville.]

MEDICINES INFORMATION BILL [Ways and Means]

Resolved,

That, for the purposes of any Act resulting from the Medicines Information Bill, it is expedient to authorise—

(a) the taking into account, in determining the amount of fees to be fixed in accordance with section I of the Medicines Act 1971, of any expenses of a Minister of the Crown in consequence of the Act resulting from that Bill; and
(b) the payment of sums into the Consolidated Fund. —[Mr. Sackville.]

TRADE AND INDUSTRY

Ordered,

That Mr. Stanley Orme be discharged from the Trade and Industry Committee and Ann Coffey be added to the Committee.—[Sir Fergus Montgomery, on behalf of the Committee of Selection.]

Sunderland University

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chapman.]

Mr. Roland Boyes: Tonight I am paying a tribute to the staff and students of the new Sunderland university. I decided to speak about the university because, as one of the Members of Parliament representing Sunderland, I am extremely glad and proud that university status has been achieved, for the benefit of the staff, students and community.
Every institution has to have a leader. In Dr. Anne Wright we are fortunate to have a person who will lead the university into the 21st century. Dr. Wright has already stamped her mark on the city of Sunderland in a big way. She has ensured that there is a major relationship with industry and has speedily established strong links with the wider community.
The pro-vice-chancellor has said:
The next decade is going to be a time of great change for the university.
It is also a time of great change for the city of Sunderland. The two will work closely together as the 21st century aspiration begins to come to life.
A contributor to "Sparks", the university staff magazine, says:
Hand in hand with the changes go vast benefits for the city of Sunderland and its residents—generating directly and indirectly thousands of full-time and part-time jobs, encouraging investment and supporting new businesses.
That can only be to the good. Too many jobs have been lost in the city, and activity at the university in many different ways will result in very many jobs being created.
The pro-vice-chancellor recently wrote:
The university currently has around 48 buildings, some of which are very recent purpose built, others which are longer in vintage. As we cope with the changes taking place in our education, it is our aim not to diversify the campus further but to have a smaller concentration of more purpose built accommodation.
Once again, that will benefit the people of the area and create more jobs.
It has been a good time for those who wish to participate in some way in welcoming the new university and at the same time welcoming the new city status of Sunderland.
There are many problems in the north-east and Sunderland has had more than its share. We have seen the destruction of the shipping industry and the decimation of the collieries. However, this evening I wish to concentrate primarily on the role of the university.
For many years Sunderland has had a polytechnic and it has produced a rich vein of students at both undergraduate and postgraduate level. According to the history book the poly was designated in 1969, but its origins can be traced back to 1860, and I reckon that that is a few years before my time and the Minister's time.
Sunderland polytechnic was one of the first. To a large extent the poly was able to flourish because of the full support of the local authority, then the Sunderland borough council. Thirty years later, the polytechnic lost its title and the university of Sunderland was born. The change to university status has my full support. In reality it was too long in coming. The change from polytechnic to university has led to some interesting situations.

My niece Julie, for example, left school in the hope of getting on an undergraduate course. Julie took the first part of her degree at the Leicester polytechnic. Later, she did a year in industry, and she will graduate, it is hoped with a good degree from the de Montfort university. There must be many students throughout the country who have had experience similar to that of my beloved niece Julie.
In the past, some students who could not get on a university course settled for a place in a polytechnic. There were two different institutions, and one did not have the same bite as the other. In effect, the university place meant more than the polytechnic place, although I must confess that I never believed that to be the case. It has been asked "What's in a name?" In this instance, a great deal, I would think.
I had many friends who worked in the polys and they produced research of the very highest level, comparable with that of any university. For some time I had a very bright woman working in my office. Hanna had completed a master's degree at Sunderland poly in economics, and her husband completed his PhD at Sunderland poly too. Yes, I am pleased that our higher education institutions are now known by the same name—university.
The university of Sunderland has had a strong school of art over the years, and I was extremely glad to be invited to meet the head of the art department, Flavia Swan. Flavia runs a large school of art where students turn out work of the highest quality in painting, sculpture and other subjects.
However, I was more than pleased when I discovered that there was a photography course in the department. The quality of the work that I saw was very good. The two teachers on the course had to work hard to satisfy all the demands of the students. I suppose I could get away with a hint at this time. I should like to see the photography department strengthened and an exhibition area built in one of the new buildings—accessible, I should hope, to the public.
For many years we had to use the silver halide process, though in the next century we will see new processes using computers and digital methods to create new styles of photographs. I am fortunate to be invited to the university photographic department from time to time to chat to students about short-term and long-term changes in photography. I look forward to continuing to do that.
The university has plans to grow in size to 16,000 students by 1996 and to achieve its target of 18,000 students by the year 2000. Dr. Wright believes that the distinction between full-time and part-time attendance modes will fade as modularisation advances.
Additionally, the number and types of courses have changed to meet the changing demands of our ever growing and more complex society. Many new departments and courses will flourish, either by additions to existing ones or the creation of new ones. It is a most exciting time for all of us who have looked forward to the new university and its growth plans.
An important aspect of a university is its relationship with industry. I was glad to be invited by Dr. Wright to hear a fine speech by Peter Wickens, director of personnel and information systems for Nissan. He had been awarded an honorary professorship of the university. I can think of no one more deserving of such an honour. Nissan Motor Manufacturing (UK) Ltd. is based in my constituency; it builds fine cars and has created thousands of jobs for the local population. We are very fortunate to have Nissan in


Washington. The company has a role to play in the city of Sunderland and in the north-east generally. As Nissan prospers, it is only to be expected that other companies will locate in the area.
In partnership with industrial giants—Nissan, Vickers, Grove Worldwide, Komatsu—the university's school of engineering and advanced technology has launched the first course in the United Kingdom to combine specialist training in automotive design and manufacture. Practically based, and taught in a purpose-built design studio setting, that unique programme offers options from graduate to postgraduate level. The programme is geared towards producing highly skilled and flexible graduates for direct entry into the north-east's burgeoning automotive industry.
The availability of specialist consultancy and expertise has been a major factor in the decision of several Japanese companies to locate in the north-east. The university has a Japanese studies division which supports Japanese industries moving into the region and provides practical training for local companies looking to expand into the Japanese market.
The university also has an important role in the community which can be illustrated by two interesting projects. The Hendon nature space is an award-winning, student-run nature reserve developed on derelict industrial land for use by local school and community groups.
The university, Sunderland football club and the city have a role to play. Many believe that the heart of the city is Roker park, Sunderland football club's ground. The university plays an important role by sponsoring a soccer player and running a certificate course in crowd and stadium management—a brilliant innovation. The course has been designed in partnership with Sunderland football club, local authorities and the emergency services. It is the first course in the United Kingdom to provide specialist training in safety for stadium managers and stewards. Disasters such as Bradford, Heysel and Hillsborough have shown the need for such a co-ordinated approach to crowd safety. It is a credit to the university that it has established such a suitable course.
The university is also committed to improving access to its courses for women, mature students and other groups who all too often miss out on higher education. The university of Sunderland recruits more students from access courses than any other north-east university. We recruited 300 in 1992 and more than half the current student body was 21 or over at entry. Graduates in 1992—this must be fairly unique—included a family of four: a mother, father, daughter and son-in-law, who all graduated on the same B.Ed course. To top that, a 70-year-old grandmother graduated on the same course.
I have given the Minister notice of some questions that I should like to have answered. First, the long overdue opening up of higher education pioneered by the university of Sunderland and the former polytechnic has been a considerable achievement. However, given the Government's current policy of consolidating student numbers in the higher education sector, is there not a danger of much of this excellent work being undone?
Secondly, the north-east has one of the lowest higher education participation rates, and there is a real danger of mature students being squeezed out by the consolidation.

Is not this to be regretted, bearing in mind the urgent need for a skilled work force to lead the economy out of recession?
Thirdly, Sunderland, along with many other new universities, performed well in its first entry to the Higher Education Funding Council for England research rating exercise, despite the fact that the former polytechnics have historically received only 1 per cent. of Government funding for this area. Will the Government take this considerable achievement into account and develop a more equitable funding system for research in the unified higher education sector?
Finally, given the university of Sunderland's excellent links with business, industry and the community, will the valuable role of higher education institutions be properly addressed in the measures being introduced on employment and retraining?
I should like to conclude with the words of Dr. Wright, whom I respect and admire greatly. During an address at the annual awards ceremonies for 1992, she said:
A new city, with a new university, but in celebrating change we also celebrate history and continuity, the University of Sunderland has the same commitment to providing knowledge and skills, confidence and capability for life and for work, to fulfil individual potential and contribute to society and its economy.

The Parliamentary Under-Secretary of State for Further and Higher Education (Mr. Tim Boswell): I congratulate the hon. Member for Houghton and Washington (Mr. Boyes) on his good fortune in securing the Adjournment debate and on his extremely positive and constructive message of a success story. I am also delighted to have the opportunity to speak about the higher education sector and, in particular, about the extremely high quality of education and research at Sunderland, one of our new universities. As the hon. Gentleman said, the enterprise and initiative of the vice-chancellor, Dr. Anne Wright, and the senior management of the university are creating many exciting developments in the north-east.
As the hon. Gentleman said, Sunderland university has grown quickly from small beginnings into one of the leading higher education providers and a major employer in the area. When it began life as a polytechnic in 1969, it had just 1,000 students. The number has increased steadily, and there are now 11,000 students studying full and part time. Indeed, the figure has risen by 3,000 since 1989 alone.
The growth is remarkable, but it reflects what has been happening throughout higher education in the past decade. Encouraged by the Government's policies for growth, universities, the former polytechnics and colleges have been educating more and more people. Last year, student numbers were more than 60 per cent. higher than when the Government came to power in 1979. During that period, the proportion of young people entering full-time higher education has doubled from one in eight to well over one in four. We remain well on target to see participation reach one in three by the end of the decade.
Expansion has not merely meant more of the same. During the 1980s, the proportion of female students, to which the hon. Gentleman referred, increased from just over 40 per cent. to about one half. Mature entrant numbers rose faster than those of young entrants. I find it remarkable that by 1990 more mature students were entering higher education than young students.
We see no reason to suppose that the recent developments are likely to discriminate against mature students. We have safeguarded the fees position of the part-timers which, as the hon. Gentleman knows, mature students will so often be. I think that his fears on that issue are not justified.
The figures that I have given are statistics. As the hon. Gentleman said, what lies behind them is the reality that thousands of young people whose parents never went into higher education and many of whom never even thought about it, have benefitted from one of the best educations in the world. Perhaps even more satisfactory is the fact that thousands of older people who missed out when they were at school have returned to education and received a qualification.
That is a development of enormous economic and social significance not only in Sunderland but nationally. Apart from the benefits to the people themselves, which are important, the country as a whole can only profit from an investment on that scale in its most potent and precious resource—its people and their personal skills.
Perhaps even more remarkable is the fact that the growth in student numbers has not been at the expense of quality. More has not meant worse. Despite rapidly increasing numbers, entry standards have been maintained. The proportion of first and upper second class degrees awarded by universities, former polytechnics and colleges has increased substantially.
Although those figures relate to teaching, expansion has not been confined to teaching alone. During the 1980s, universities' earnings from research grants and contracts more than trebled. Increasingly, the private sector—industry, business and commerce—looks to our universities and colleges to provide the expertise and research facilities that it needs to compete in world markets. That includes not only British companies but those from the European Community and further afield. Indeed, the hon. Gentleman mentioned Nissan's involvement in his local university.
The hon. Gentleman asked about research. I remind him that the new universities—although they are new and have not traditionally conducted large amounts of research—have the benefit of drawing on a pool of £16 million earmarked as pump-priming finance for the former polytechnics and new universities. That was a positive and imaginative move.
It is particularly valuable that, at Sunderland university, over 40 per cent. of all students are studying the sciences, engineering and technology. This rises to over half if subjects and professions allied to medicine are included. I know that it has not been particularly easy for some universities and colleges to attract students to study science. I therefore commend the achievement of Sunderland, on which I hope that it will build.
The commitment to science goes hand in hand with the contribution Sunderland university is making to its local community, especially the business community. Perhaps this can be seen most clearly in the new industry centre that has opened recently on the campus. The centre aims to offer industry the highest possible standards in training, consultancy and manufacturing services, and may pick up some revenue for the university in the process.
Contained within the centre is a micro-technology centre, one of the north-east's leading microcomputer training and consultancy organisations; there is also an advanced manufacturing systems centre, reputed to be the

most up-to-date facility of its kind anywhere in the United Kingdom providing consultancy services in computer integrated manufacturing and design systems; and a scanning electron microscopy centre offering a 24-hour turnaround service.
The university's commitment to local industry and business is matched by that to local residents. That is equally important given the circumstances of the city. For too long, the world of higher education has often seemed remote, not to say elitist, for many of the people who live just a stone's throw from the walls of a university or higher education college. To combat this, Sunderland has worked closely with local further education colleges in the area to ensure that, for those who wish to enter higher education, there is close integration of course work and teaching. That makes Sunderland university a warm and welcoming place of learning.
So much for the past and the present. What of the future? The Government announced their funding plans for HE in last year's autumn statement. The plans mean that a total of £3.9 billion will be available to HE institutions in 1993–94, an increase of £265 million, 7.3 per cent. in cash or 4.4 per cent. in real terms, in available public funding for HE. That builds on successive increases of 10 per cent. in each of the past three years and provides for an 8.5 per cent. growth in full-time equivalent student numbers next year and 106,000 extra places by 1995–96. That means that the current record levels of participation can be maintained over the next three years before they are projected to rise to one in three by the year 2000. There is a useful period of consolidation, a time for universities and colleges to take stock—something I know that many have been seeking.
The hon. Gentleman referred to the implications for Sunderland, and I feel that institutions that have expanded especially fast may benefit from a pause before a period of further expansion. That would not be to their disadvantage. At the same time, institutions will need continuing improvements in efficiency by making better use of their resources, and I am sure that they will make them.
I stress that, by 1992, we had already reached participation rates that we had projected in our White Paper would not be reached until 1994 or 1995. That shows that universities and colleges such as Sunderland have responded magnificently to the challenge of expanding and making productivity gains. But the rate of expansion has been so great that it now makes sense to pause and take stock, and to put some additional emphasis on further education.
Like many other universities and colleges, with Government support Sunderland university is building for the long-term future. It is developing its existing campus, and a new building for pharmaceutical sciences will soon be in operation. In co-operation with the Tyne and Wear development corporation, the university is building a new campus site on the north bank of ther River Wear estuary, covering 25 acres of former industrial operations. Appropriately for a university, the site includes the historic seventh-century church of St. Peter's, where the Venerable Bede studied.
The plans are for a four-phase development over 10 years. Eventually, the site will house the business school, computing and information systems, the school of education, the school of art and design, a conference centre, a heritage centre, and a learning resource centre.


Also, 450 direct and indirect jobes will be created by the first phase of the development, and more than 1,000 will be created when the project is completed.
But growth is not just a matter of spending money and increasing accommodation. Institutions can maximise the use of their resources through distance learning. To its great credit, Sunderland university has embarked on a major initiative, which I much support, to develop open and distance learning across the massive range of its courses, using a range of media to reach the maximum possible number of students, ever developing the community campus-based radio station, Wear FM community radio. It is pioneering and developing computer-based learning, including the use of external

data, satellite and cable television. It is transforming its learning materials into high-quality distance learning packages, which are very valuable for part-time mature students with family and domestic responsibilities.
Those are very positive developments. I take great pride as a Minister in our diverse higher education system. It is buoyant, optimistic and successful. In the university of Sunderland—a new university; a former polytechnic—we have a prime example of much that is good in higher education today. I join the hon. Gentleman in commending its vice-chancellor, Dr. Wright, her staff and the students for their continuing achievements. I wish them every success for the future.

Question put and agreed to.

Adjourned accordingly at one minute past Twelve o'clock.